- The crypto lender plans to increase recoveries by 5%.
- The settlement also includes options to pay claims using cryptocurrencies.
The bankrupt cryptocurrency lender Celsius Network has agreed to increase customers’ recoveries by 5% as part of new settlements to exit bankruptcy. The presiding judge, Martin Glenn, will analyse the agreed terms in New York on August 10.
The crypto lending platform has also agreed to settle part of the claims under the interest-bearing Earn Program using cryptocurrency. The program’s beneficiaries also have the option to be compensated with the shares of a new company emerging from bankruptcy.
Celsius Network plans to repay about USD 80 billion to more than 30,000 customers who have filed claims since the company went bankrupt in 2022. In the statement, the company said the payment would result in tax benefits.
“The creditors have agreed to support an amended plan that will provide the holders of retail borrower deposit claims with the option to repay the principal balance of their loan in exchange for an equivalent amount of cryptocurrencies, which could lead to a tax benefit for such holders,” the filing noted.
Former CEO Arrested
The latest development followed the arrest of Alex Mashinsky, the former Chief Executive Officer of Celsius Network, on July 13. Mashinsky is accused of securities, commodities, and wire fraud, and securities manipulation.
Additionally, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission charged Mashinsky and Celsius Network for violating several securities regulations, including failing to register the interest-bearing Earn Program.
Following the charges, the Federal Trade Commission (FTC) announced that it had penalized Celsius and Mashinsky $4.7 billion. The settlement, which will not be paid until Celsius’ creditors and investors have been compensated, is one of the largest in the commission’s history, with nearly $5 billion charged against Meta in 2019.
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