CEL gains 3% as Celsius Network announces $220M third creditor payout
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The bankrupt crypto lending firm Celsius has announced another round of creditor compensation in its ongoing restructuring plan.
The company has announced that it will reimburse $220.6 million to eligible clients who suffered massive financial losses after Celsius’ 2022 debacle.
Celsius has completed two creditor distribution rounds, and the current one will likely offer clarity and hope for investors waiting to recover their funds.
It distributed $2.53 billion to over 250K creditors in early 2024 and $127 million in November 2024.
According to court filings, the $220.6 million amount comprises different sources within Celsius Network.
Around $17 million came from disallowed claims linked to Celsius’ founder.
The company has released $86.4 million in disputed claims reserves and $46.3 million on forfeited claims.
Notably, the case carries massive financial costs, with approximately $63.2 million spent on administrative and legal expenses.
Qualified creditors will receive their payouts through Bitcoin or USD (cash), similar to the previous distributions.
Meanwhile, they should complete the Know Your Customer (KYC) procedure through PayPal and Coinbase.
Institutions that cannot access PayPal or Coinbase will receive their compensation in cash, while others will receive it in crypto.
However, Coinbase has some restrictions: it will only complete the distribution if the eligible creditor used the exchange to receive at least one of the previous payments.
An official announcement stated:
Creditors will receive their distributions in USD if PayPal, Venmo, or Coinbase cannot reasonably facilitate a cryptocurrency distribution, or if the creditor previously opted for a USD distribution by completing the Distribution Conversion Form.
The payment structure highlights the complexities of Celsius’s distribution process, especially as the firm’s collapse impacted different groups depending on their agreements at the settlement phase and exposure.
Celsius’ recovery efforts
The cryptocurrency lender filed for bankruptcy in mid-2022, driven by poor liquidity management, risky fiscal practices, and market volatility.
Celsius gained traction as it promised up to 18% in yearly returns.
However, it relied on leveraged trading and unsecured lending.
The 2022 market crash forced the lending firm to freeze withdrawals before eventually filing for bankruptcy with a $1.2 billion debt.
The collapse saw investors losing assets worth billions.
What followed were lawsuits and regulatory clampdowns against Celsius’ leaders.
Legal troubles forced the lending company to shift to BTC mining-only operations in 2023.
While Celsius’ compensation period is past halfway, most creditors complain about slow recoveries.
CEL price outlook
The native token soared 3.66% from $0.07353 to $0.07622.
The creditor payment announcement sparked the price uptick as bears dominated the crypto space.
Bitcoin has plunged below $114,000 after crashing from last week’s ATH above $124,000.
The crypto market displays weakness, signaling further dips before possible bounce-backs.
BTC bears target the support barrier around $112,000.
CEL will likely retrace its latest gains in the coming hours amidst such sentiments.
Meanwhile, Celsius’ native token has struggled since the company’s collapse as it lacked utility, down over 65% from its 2021 all-time high.
The post CEL gains 3% as Celsius Network announces $220M third creditor payout appeared first on Invezz
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