- Celsius, a bankrupt crypto lender, is challenging a court ruling that dismissed its $444 million claim against FTX, another high-profile bankrupt crypto firm.
- The appeal follows Judge John T. Dorsey’s decision, citing procedural flaws in Celsius’ case.
- Celsius originally sought $2 billion but revised its claim to focus on alleged preferential transfers.
- The dispute underscores the tangled web of bankruptcies and legal battles in the crypto industry.
Celsius, the collapsed cryptocurrency lending platform, has formally filed an appeal after its $444 million claim against FTX was thrown out by a federal court.
https://x.com/Cointelegraph/status/1874714851274080737
This move is the latest chapter in a bitter and complex legal saga involving two of the most significant failures in the crypto world.
The Journey from $2 Billion to $444 Million
Initially, Celsius filed a $2 billion claim against FTX, alleging that deceptive practices by FTX executives worsened Celsius’ financial troubles. Over time, Celsius narrowed its focus, reducing the claim to $444 million.
https://x.com/Moon_Whales_/status/1874779004785623128
The revised claim alleged that FTX made preferential transfers, unfairly benefiting certain creditors while disadvantaging others.
However, in December 2024, Judge John T. Dorsey dismissed both the original and amended claims. The judge criticized Celsius for filing procedurally flawed documents that lacked the evidence required to back up its allegations.
In his ruling, Judge Dorsey highlighted several shortcomings:
- Lack of Prior Approval: Celsius did not obtain permission to amend its original claims.
- Unrelated Arguments: The amended claims introduced new issues not tied to the original filing.
- Delays: Celsius provided no valid reason for the delay in submitting the amended claims.
- Impact on FTX’s Reorganization: Accepting the amendments could have disrupted FTX’s efforts to restructure and repay its creditors.
Despite these setbacks, Celsius has maintained that its filings included enough information to hint at potential claims under the Bankruptcy Code.
Celsius’ Appeal and Continued Efforts
On December 31, Mohsin Meghji, Celsius’ litigation administrator, formally filed an appeal, challenging the court’s memorandum opinion and final order. This signals Celsius’ determination to recover what it believes is owed, despite the hurdles it has faced so far.
https://x.com/sunil_trades/status/1872357502446194777
Celsius argues that even if its filings lacked extensive detail, the core elements of its case were sufficient to merit consideration. The appeal is now a critical part of Celsius’ broader strategy to recoup funds and maximize creditor recovery.
Progress in Creditor Repayments
Amid its legal battles, Celsius has made strides in repaying creditors. By August 2024, the company reported having returned $2.53 billion to over 250,000 creditors, covering around 84% of its total liabilities. Additional payouts, including $127 million recovered through litigation, are also in the pipeline.
While these repayments are a positive step, they remain overshadowed by the lingering disputes with FTX and the financial struggles of many creditors.
CEL Token’s Rollercoaster Ride
Celsius’ native cryptocurrency, CEL, has experienced significant volatility during these developments. Following the announcement of the $2.5 billion repayment in September, CEL’s value skyrocketed by 350%, hitting $0.56. However, the token has since plummeted to below $0.20, marking a staggering 97.5% drop from its all-time high.
What’s Next?
The outcome of Celsius’ appeal against FTX could have significant implications for its ongoing bankruptcy proceedings and the broader crypto industry. This case sheds light on the challenges of navigating creditor priorities and asset distribution in an industry grappling with financial turmoil.
For now, Celsius continues to fight for its claim while trying to rebuild trust and recover as much as possible for its creditors.
