Thomas Daniels
An FTX creditor activist disclosed that Celsius Network, the now-defunct cryptocurrency lender, has appealed a court ruling that denied its $444 million claim for FTX-related damages. The ongoing legal conflicts resulting from the bankruptcies of both cryptocurrency platforms have entered a new phase with this development.
According to court documents, Celsius is contesting Judge John Dorsey’s December decision, which rejected its demand for damages related to FTX’s purported involvement in Celsius’ demise. At first, Celsius demanded damages of up to $2 billion, claiming that FTX managers had made “unsubstantiated and disparaging statements” on Celsius’ financial viability, which the business claims hastened its demise in 2022.
Before the court-imposed cutoff date, Celsius lowered its initial claim to $444 million and redirected its attention to obtaining “preferential transfers” in order to give creditor repayments priority. The updated claim was challenged by FTX debtors, who said it was filed too late to comply with legal standards and lacked adequate evidence.
According to Judge Dorsey, Celsius’ first evidence of claim, which included few specifics, was insufficient to support its claims. Additionally, he dismissed the updated $444 million claim, claiming that it had nothing to do with the initial submission and that Celsius had not asked for authorization to make the change or provided an explanation for the hold-up.
Celsius asserts that debtors were properly notified and that its initial proof of claim met the Bankruptcy Code’s minimal standards.
As part of its bankruptcy resolution procedure, Celsius has also promised to pay out $127 million to creditors from its lawsuit recovery account. In the meantime, Alex Mashinsky, the company’s former CEO, is charged with crimes related to Celsius’s demise, including wire fraud and market manipulation. Mashinsky might spend up to 115 years behind bars if found guilty.
As efforts to settle claims and retrieve money continue, this appeal adds to the intricate legal entanglements involving the collapse of significant cryptocurrency players, like as FTX and its founder, Sam Bankman-Fried.
