Celsius, the bankrupt cryptocurrency lender, has completed the distribution of liquid crypto assets to most eligible creditors through its distribution agents, PayPal and Coinbase. This follows the recent announcement of Celsius exiting bankruptcy, which it initiated in July 2022.
According to a court filing by Kirkland & Ellis, Celsius’ legal representation, PayPal facilitated crypto distributions to holders in the United States, while Coinbase managed overseas distributions. The distribution amounted to $2 billion worth of crypto, including 20,255.66 Bitcoin and 301,338.77 Ether.
Creditors who did not agree to the restructuring plan will not receive any distribution until their individual claims are resolved. Additionally, account holders may face challenges in receiving their distributions if flagged for Anti-Money Laundering (AML) or compliance issues by Coinbase or PayPal.
There has been speculation within the crypto industry about the impact of Celsius’ restructuring plan on the broader crypto market. Previous reports indicated Celsius’ efforts to recall and rebalance its crypto assets to ensure timely distributions, with blockchain analytics firm Nansen highlighting significant ETH holdings in the pending withdrawal queue belonging to Celsius.
Former Celsius CEO Alex Mashinsky is scheduled for trial in September 2024 regarding Celsius’ collapse. However, his legal team faces scrutiny for potential conflicts of interest, as they also represent Sam Bankman-Fried, former CEO of bankrupt crypto exchange FTX. U.S. Prosecutors have raised concerns about this dual representation, prompting calls for a Curcio hearing to address potential conflicts of interest.
Celsius’ completion of crypto distributions to creditors marks a significant milestone in its bankruptcy proceedings. However, challenges remain, including resolving claims of creditors who did not agree to the restructuring plan and addressing potential conflicts of interest in legal representation. The outcome of these proceedings will likely impact the broader crypto market and shape future regulatory considerations.
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