On March 29, Paxful CEO Ray Youssef announced via Twitter that users of their Earn program affected by the collapse of Celsius Network in 2022 will be refunded. Youssef said that funds would become available for these users in Paxful’s wallet in the coming days and affirmed: “I’ve personally taken action and will be refunding all affected Paxful users.”
When Celsius filed for Chapter 11 bankruptcy in the US on July 14, it was unclear whether depositors would receive any of their funds back. The company’s liabilities – mostly comprised of user deposits – amounted to $4.72 billion according to the filing. Nonetheless, this announcement brings respite and hope to affected users.
It is essential to know that Paxful hasn’t disclosed how much it is returning to its customers.
Judge Martin Glenn ruled on Jan. 4 that Celsius owns the funds in its interest-bearing Earn program, not its depositors, during a bankruptcy hearing for the company. Youssef commented on this decision: “The collapse of Celsius caused significant pain to many users and undermined confidence in our sector. Paxful, like other companies, were unable to act because we could not recover funds held by Celsius. When the court decided that the Celsius Earn Account as part of its bankruptcy estate instead of belonging to its users, it felt wrong then and still feels wrong now.”
Bankruptcy proceedings for Celsius is still ongoing, but a recent settlement plan between the committee of unsecured creditors and a group of account holders has been approved. This will allow customers to recover 72.5% of their crypto holdings. In February, Celsius announced that NovaWulf Digital Management would act as their restructuring sponsor, which means that over 85% of customers can expect to recover roughly 70% of their crypto assets.
