Celsius Network, a bankrupt cryptocurrency lending company, has approached the court for relief concerning the distribution of proceeds from the sale of the self-custody platform GK8. Significantly, on July 17th, the company’s unsecured creditors filed a document.
It announced that the Series B investors of the company had agreed to a settlement. This agreement would divide $25 million from the GK8 sale. The creditors’ committee, the debtors, and the original consenting Series B preferred investors agreed to this arrangement.
The proposal advocates for $24 million to be spent on legal fees. Consequently, the remaining $1 million would be divided among the stockholders. The debtors have agreed to this proposed allocation and continue to support it. According to the filing, this allocation provides the initial consenting Series B holders with reciprocal benefits.
Moreover, the settlement agreement led to a mutual desire to avoid protracted litigation and additional professional costs associated with a confirmation hearing. The report specifies that creditors stand to gain much from the settlement. Additionally, the debtors and all parties involved get invaluable peace of mind about the future. Hence, the court should reject the defendants’ objections and provide the sought remedy for the reasons stated in the motion.
In late 2021, Celsius paid $115 million to purchase the Israeli firm GK8 in the self-custody space. However, after Celsius went bankrupt in 2022, the struggling crypto lender had to sell GK8 as part of a restructuring plan. Galaxy Digital, an investment corporation by Mike Novogratz, outbid rivals to acquire GK8 in late 2022.
Legal concerns and penalties
Besides the GK8 sale, Celsius is dealing with several legal concerns in the middle of July. News emerged that the United States Securities and Exchange Commission had filed an action against Celsius. The U.S. Federal Trade Commission levied a $4.7 billion penalty on Celsius the same day. This news came with the arrest of former CEO Alex Mashinsky on July 13.
The ongoing legal concerns and the recent settlement agreement highlight a tumultuous period for the Celsius Network. The outcome of these proceedings will significantly impact the company’s and its stakeholders’ future.
