WSJ: Celsius reaches key settlements to return funds to clients

Bankrupt crypto lending platform Celsius Network has signed a series of global settlements that pave the way for court approval for the return of funds to clients. The Wall Street Journal reports.

According to the report, one of the settlements allows resolving users’ claims of fraud by the former management by increasing the restitution by 5%. Altogether, the settlements resolved 30,000 claims for compensation totaling $78 billion.

Court documents indicate that the package of agreements laid the groundwork for approval of Celsius’s restructuring plan in October. Creditors and investors are set to begin receiving funds by the end of the year if the ruling is favorable.

The company’s lawyers noted that clients cannot claim amounts exceeding the deposits they made. However, some users have filed additional lawsuits for damages arising from the former management’s improper actions.

Another agreement resolves a dispute between Celsius’s two largest client groups: holders of interest accounts and borrowers of fiat-currency loans secured by digital assets. Borrowers sought a more favorable reimbursement regime and gained the ability to reclaim cryptocurrency from collateral after loans are repaid.

The bankruptcy court is expected to review the settlements for approval in early August.

Celsius’s restructuring plan envisions returning a portion of clients’ cryptocurrency and compensating the remainder with shares in the new company. The latter will be registered by the Fahrenheit consortium, led by Arrington Capital and Proof Group. The firm will manage Celsius’s mining business and other illiquid assets.

Earlier, the U.S. Department of Justice brought seven criminal charges against the Celsius crypto-lending platform and its former chief, Alex Mashinsky.