Celsius to pay investors $25 million from GK8 sale

The bankrupt Celsius Network reached an agreement with Series B investors to distribute $25 million from the sale of the GK8 crypto custodian.

Under the agreement, $24 million will go toward covering legal costs, and the remaining $1 million will be shared among depositors.

“The agreement ends a highly contentious lawsuit and removes one of the biggest hurdles to the $25 million payout from the GK8 sale, including a mutual waiver of claims,” the document says.

Series B investors are Celsius’s largest depositors. They are now asking the court to approve the settlement and proceed with the bankruptcy process.

The company acquired GK8 in November 2021 for $115 million. After filing for insolvency, the firm was put up for auction, which was won by Galaxy Digital of Mike Novogratz. The price of the deal was not disclosed, but the purchase cost less than Celsius had originally anticipated.

In June 2022, the crypto lending platform suspended withdrawals, trading and transfers between accounts — due to extreme market conditions.

After filing for bankruptcy in Celsius, the company reported a $1.2 billion gap in its balance sheet. In August it became known that the company’s liabilities exceeded its assets by $2.85 billion.

In September, the platform’s head Alex Mashinsky left the role of CEO. In early 2023, the New York Attorney General charged him with deceiving investors “by billions of dollars.”

On July 13, the U.S. Department of Justice brought seven criminal charges against the former Celsius chief. Among them were securities fraud, manipulation of the CEL token price and deceiving investors.

Later the U.S. Federal Trade Commission announced a settlement of claims against the company. The agreement calls for the platform to pay $4.7 billion.