The U.S. Bankruptcy Court of the Southern District of New York has approved a request by bankrupt crypto lender Celsius. A request to set a deadline for its customers to submit proofs of claim in the ongoing bankruptcy proceedings.
Celsius Bankruptcy Proceedings And Deadline
“The bankruptcy court approved our motion to set the bar date, which is the deadline for all customers. A deadline for all customers to make a claim. The bar date has been set for January 3, 2023,” Celsius wrote in a Twitter post Sunday.
According to Celsius, the firm’s claims agent Stretto is going to notify customers regarding the bar date. This notification will contain their next steps via email or physical mail for those customers with an address on file.
Additionally, customers should expect to receive a notification in the Celsius app. The court ruling also listed several categories for which customers will not need to submit a proof of claim. These include customers whose claims are not scheduled as “disputed,” “contingent,” or “unliquidated.” It also includes cases where the claimant does not disagree with the amount, nature, and priority of the claim.
The Celsius fallout
Celsius became one of the first major crypto lenders to freeze user withdrawals. This followed the crypto market crash in June this year. Furthermore, after weeks of silence, the firm eventually filed for bankruptcy. This revelation revealed a $1.2 billion dollar hole in its balance sheet.
Celsius CEO Alex Mashinsky, who was allegedly responsible for a series of poor trades in early 2022, resigned in September. Mashinsky reportedly withdrew as much as $10 million from the company’s account in May. This happened several weeks before the firm halted withdrawals.
In September, the Vermont Department of Financial Regulation alleged that Celsius had been secretly insolvent since 2019. They also revealed that CEO Alex Mashinsky had made false and misleading statements to exaggerate the firm’s financial health.
Meanwhile, the firm is also facing allegations of running a Ponzi scheme. Judge Martin Glenn of the U.S. Bankruptcy Court is ordering the court-appointed examiner and the official committee of Celsius creditors to settle on who will lead a probe into the firm’s use of customer money.
At the time, Greg Pesce, the creditors committee’s lawyer, gave a statement to the Wall Street Journal. The statement goes thus; “We don’t know if Celsius was a Ponzi scheme, but there are flags that came up.” He went further to add that the probe was “looking into whether it is.”
The broadened scope of the probe into Celsius’ operations now also includes the company’s marketing practices. It also includes representations it made to onboard new customers, as well as its handling of the platform’s native token. The next hearing in the Celsius case is scheduled for December 5.
Meanwhile, FTX Is Owing $3 Billion To A Few Of Its Biggest Creditors
Cryptocurrency exchange FTX said it owes $3.1 billion to its top 50 creditors. This information is according to documents filed Saturday in Delaware bankruptcy court.
Even though the filing did not disclose the names of the parties wrapped up in the swift demise of FTX, the document makes clear the scope of the potential losses its clients face.
Consequently, FTX’s top ten creditors alone have more than $100 million each in unsecured claims, according to the filing. This figure equal to more than $1.45 billion combined. The filing explained that the debt does not involve anything owed to company insiders. It also explain that everything is subject to change as more information becomes available.