In a significant move amid financial turbulence and legal complexities, Celsius Network has initiated the process of withdrawals for a select group of users. This marks a pivotal moment for both the company and its clients.
Eligibility Criteria and Withdrawal Details
As per the recent filing in the United States Bankruptcy Court for the Southern District of New York, participants falling under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims” are now eligible for fund withdrawals. The deadline for withdrawals has been set for Feb. 28, 2024.
Eligible participants are further entitled to withdraw 72.5% of their cryptocurrency holdings, with transaction fees being deducted. Notably, customers who opposed the reorganization plan have been excluded from this opportunity. Instead, a litigation administrator will independently manage their assets for a duration of six months.
Post-Bankruptcy Developments and Legal Hurdles
Since filing for bankruptcy in July 2022, Celsius has navigated through a maze of legal obstacles. In March, a settlement plan gained endorsement, assuring deposit account holders 72.5% of their funds in two installments throughout 2023.
In a subsequent update, creditors approved the company’s reorganization plan in September, setting the stage for the distribution of approximately $2 billion in Bitcoin and Ether. The transfer of the company’s equity to NewCo, overseen by the Fahrenheit consortium, was a major step.
In a recent announcement on Nov. 20, Celsius revealed that the core business of the NewCo company, proposed under its restructuring plan, will pivot towards Bitcoin mining instead of staking.
Regulatory Challenges and Legal Battles
Moreover, Celsius has faced bankruptcy proceedings and legal challenges from various regulatory entities. Furthermore, lawsuits from the U.S. Securities and Exchange Commission, the Federal Trade Commission (FTC), and the Commodity Futures Trading Commission have all targeted the company and its CEO, Alex Mashinsky.
The allegations primarily revolve around accusations of customer deception. While Celsius reached a settlement of $4.7 billion with the FTC, Alex Mashinsky however, is set to face a criminal trial.
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