Celsius, the defunct cryptocurrency lender, filed a notice of appeal on Tuesday challenging a recent court ruling that dismissed its claims for damages against FTX as part of its ongoing bankruptcy proceedings.
Since early 2024, Celsius has sought to recover $2 billion from FTX, initially citing “unsubstantiated and disparaging statements” made by FTX executives, which it claimed contributed to its collapse. However, in a revised claim, Celsius focused on “preferential transfers” made by FTX that allegedly favored certain creditors. This revised claim, which was filed in July 2024, stood at $444 million.
In December 2024, Judge John Dorsey ruled against both of Celsius’s claims. He determined that the lender’s original proof of claim lacked sufficient evidence to support the need for a preferential transfer investigation. According to Dorsey, the original filing merely mentioned a potential investigation, which was not enough to validate the preferential transfer claim.
The court also ruled that Celsius’s amended claims were improper. Specifically, it found that the company had not sought permission to amend its original filing, and the amendments were insufficiently related to the initial claims. Moreover, Celsius provided no explanation for the delay in filing the amendments, and the changes were viewed as disruptive to FTX’s ongoing reorganization efforts.
Celsius’s Payout Efforts
Celsius has been actively working to address its outstanding debts. In August 2024, the platform distributed more than $2.53 billion to approximately 251,000 creditors. This payout covered nearly two-thirds of the eligible creditors and accounted for 93% of the total claims in value. The funds were distributed in both cryptocurrency and cash, based on market prices as of January 16.
In November 2024, Celsius announced an additional $127 million payout to its creditors, covering around 60% of their outstanding claims.
Founder’s Legal Troubles
Meanwhile, Celsius founder Alex Mashinsky faced legal challenges of his own. Last month, he pleaded guilty to charges of commodities fraud and price manipulation related to the Celsius token. The most serious charge carries a potential sentence of up to 20 years in prison. Mashinsky’s sentencing is scheduled for April 8, 2025.
As Celsius continues to pursue its appeal, all eyes remain on the unfolding bankruptcy case, with creditors and industry watchers closely monitoring any new developments.