- Celsius users who withdrew funds from the platform before its collapse are facing clawbacks
- Those who withdrew over $100,000 in the 90 days preceding its bankruptcy will have to pay some back
- Those who withdraw under $100,000 are exempt but must adhere to legal requirements for the reorganization plan
Celsius users who withdrew significant sums in the months preceding the company’s bankruptcy announcement will be subject to clawbacks and may face legal action if they don’t comply. A notice published on Tuesday specified that account holders who withdrew more than $100,000 in the 90 days leading up to Celsius’s bankruptcy declaration on July 13, 2022, must make a payment equivalent to 27.5% of the withdrawn amount or face potential consequences. Those who withdrew under $100,000 are not affected, although they have other hoops they must now legally jump through in order to remain part of the reorganization plan.
Look Out for the Postman
Yesterday’s filing on the matter revealed that a certain subset of Celsius creditors will face the clawbacks. These are account holders who:
- Withdrew over $100,000 from their accounts in the 90 days prior to Celsius’ bankruptcy filing
- Are not “Excluded Parties”
- Did not vote to reject the repayment plan on any claims
- Did not opt out of the releases under the plan
Anyone fulfilling all of these criteria will be issued with a letter telling them how much they need to pay back in clawbacks. Complying with this condition would render these users eligible for future distributions as part of the reorganization plan.
Users who withdrew less than $100,000 are not required to return the funds, but they still need to vote in favor of the reorganization plan and refrain from opting out of the releases outlined in the plan. These individuals have been warned that non-compliance may result in potential legal action to recover any preferences received.
Celsius on the Road to Recovery
Celsius’ bankruptcy proceedings unfolded after the company declared bankruptcy in 2022, citing a $1.2 billion deficit in its balance sheet. In September 2023, creditors approved a reorganization plan where custodial account holders are set to receive 72.5% of their holdings in BTC and ETH while interest-earning account holders will get a combination of cryptocurrency and shares in a new mining company formed from Celsius’s remaining assets.
Celsius emerged from bankruptcy in November, allowing eligible creditors to resume withdrawals.
