As a long-term crypto investor with experience in navigating the volatile market, I find the recent turn of events at Celsius Network disappointing and frustrating. I’ve seen my fair share of ups and downs, and this latest development is yet another reminder of the risks involved in investing in the crypto space.
As an analyst, I’d rephrase it this way: Celsius Network, which had been quiet for several months, recently surprised its customers by filing lawsuits against them.
Celsius Network And its Creditors
The administrator overseeing the legal proceedings for Celsius Network has initiated a lawsuit in the US Bankruptcy Court situated in the Southern District of New York.
In the filing, it is stated that a specific group of Celsius account holders with over $100,000 in Withdrawal Preference Exposure (WPE) and unresolved preference liability were accused of receiving “privileged transfers.” This group consists of approximately 1,300 individuals and entities spread across the globe, including investment funds and corporations.
A Celsius Network user voiced his disappointment, explaining that “Celsius Network filed lawsuits against me and countless other users… for withdrawing our funds from their platform approximately three months prior to their bankruptcy announcement.”
Celsius Network is attempting to recover funds from creditors who made withdrawals approximately three months prior to the company’s bankruptcy filing. The timeframe for these transactions is between April 14, 2022, and July 13, 2022.
During this time, the crypto exchange underwent a considerable drawdown which had a considerable influence on its financial status. Shortly following this event, Celsius Network announced its bankruptcy filing. Regrettably, the unfavorable circumstances at the digital asset marketplace resulted in Alex Mashinsky’s departure from his role as CEO.
Up until now, Mashinsky and other top executives at Celsius Network have been accused of various charges, including market manipulation.
Celsius Network Explores Clawback Concept For Settlement
In simpler terms, the company’s earlier proposal for a settlement resulted in regaining approximately $100 million. Moreover, it played a significant role in addressing over $500 million worth of questionable transfers. Importantly, this outcome stemmed from a settlement arrangement reached with more than 1500 account holders.
As an analyst, I’ve noticed that when you request a refund from Celsius Network, they are implementing what’s known as a “clawback.” Clawback provisions permit bankrupt companies to reclaim funds withdrawn by their users within a specific timeframe prior to the filing for bankruptcy. In this instance, Celsisus Network has set the period at 90 days. They initiated this clawback process earlier in the year with the intention of recovering approximately $2 billion.
The Celsius Network’s drafting committee proposed a favorable rate for settlements reached between them and those whose taxes had been withheld. They issued a caution against legal action if the funds weren’t returned. Consequently, numerous indicted entities likely anticipated this outcome.
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2024-07-07 17:55