Celsius Begins Asset Distributions To Customers As Court Approves FTX’s Repayment Plan – Crypto News – Crypto News
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Celsius Begins Asset Distributions To Customers As Court Approves FTX’s Repayment Plan Celsius Begins Asset Distributions To Customers As Court Approves FTX’s Repayment Plan

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Celsius Begins Asset Distributions To Customers As Court Approves FTX’s Repayment Plan – Crypto News

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FTX’s creditor repayment plan was approved on the same day that Celsius began distributing assets to its former users.

Celsius and FTX, two of the largest CeFi insolvencies of the recent bear trend, have announced plans to distribute assets to creditors.

On Jan. 31, Celsius announced it has begun distributing $3B worth of cryptocurrency and fiat to its creditors. The announcement follows Celsius account holders voting in favor of its reorganization plan with 98% support in November.

The plan also paved the way for the creation of a new Bitcoin mining company, Ionic Digital. The company will be owned by Celsius creditors and its mining operations will be managed by Hut 8, a Nasdaq-listed Bitcoin mining firm. Matt Prusak, the chief commercial officer of Hut 8, was appointed CEO of Ionic Digital.

“Today, over 18 months after Celsius paused withdrawals, we began distributing over $3 billion of cryptocurrency, fiat, and stock in Ionic Digital to Celsius creditors,” Celsius said. “This milestone marks the conclusion of an 18-month process during which the Company built consensus among a wide range of stakeholders, resolved complex novel legal issues, [and] fully cooperated with all regulatory investigations.”

The company noted that it recently converted $250M worth of altcoins into BTC or ETH in preparation for distributions. Celsius also unstaked nine figures worth of Ether in January ahead of the distribution.

Celsius filed for bankruptcy in July 2022 after halting user withdrawals one month earlier. A July 2023 settlement with the U.S. Federal Trade Commission found that the firm had misappropriated more than $4B worth of customer funds under the direction of Celsius co-founder and former CEO, Alex Mashinsky, prior to suspending operations.

FTX to repay customers

On the same day, a U.S. bankruptcy court approved plans for FTX, the notorious collapsed centralized exchange that mishandled as much as $9B in customer funds, to liquidate roughly $7B worth of recovered assets to repay users.

Controversially, the proposed repayment plan would distribute assets based on crypto asset prices as of November 2022 — when the company filed for bankruptcy amid the depths of the cryptocurrency bear market. The plan has garnered criticism from its users, with the price of BTC up 150% since trading around $16,900 in November 2022. ETH has also doubled, while SOL rallied nearly 500% since.

However, U.S. bankruptcy judge, John Dorsey, dismissed customers’ complaints, asserting that U.S. bankruptcy law makes it “very clear” that debts must be repaid based on the value of FTX users’ assets at the time of the company’s bankruptcy filing.

“FTX was an irresponsible sham created by a convicted felon,” Andy Dietderich, an FTX attorney, told the Delaware bankruptcy court. “The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high.”

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The funds are also unlikely to be paid out any time soon, with the company moving to investigate the legitimacy of claims from its 9M customers. In October, FTX said it would distribute at least 90% of recovered assets to claimants.

In November, Sam Bankman-Fried, the co-founder and former CEO of FTX and its sister trading firm, Alameda Research, was convicted on all charges including wire fraud, securities fraud, and money laundering. Bankman-Fried will be sentenced on March 28 and faces up to 115 years in prison.

Dietderich noted that FTX’s current ownership does not plan on resuming the exchange’s operations.

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