Celsius Network Resurfaces With Creditor Lawsuit, Here’s What To Know

full version at coingape

Defunct crypto lending platform Celsius Network just showed up after a few months of silence to sue its customers.

Celsius Network And its Creditors

Celsius Network Litigation Administrator has filed a lawsuit in the United States Bankruptcy Court for the Southern District of New York.

The complaints detailed in the filing was targeted at a group of Celsius account holders who allegedly received “preferential transfers.” This group includes those who have more than $100,000 in Withdrawal Preference Exposure (“WPE”) and who have not settled their preference liability. Over 1,300 individuals and entities around the world, including investment funds and companies.

One X user expressed his frustration, citing that “Celsius Network has officially sued me and thousands of innocent users… because we happened to take our money off the platform 90 days before they declared bankruptcy.”

Particularly, Celsius Network is seeking a refund from these creditors who withdrew their funds 90 days before the exchange declared bankruptcy. This includes transactions processed between April 14, 2022, and July 13, 2022.

During this period, the exchange saw substantial withdrawal that significantly impacted on its financial position. It was not long after this experience that Celsius Network filed for bankruptcy. Unfortunately, the situation at the crypto exchange led to the resignation of Alex Mashinsky who was the CEO at the time.

Until this time, Mashinsky and other Celsius Network executives are facing charges of allegations and market manipulation.

Celsius Network Explores Clawback Concept For Settlement

The firm’s previous settlement offer led to the recovery of almost $100 million. It also contributed to resolving more than half a billion dollar in preferential transfers. Notably, this was the result of a settlement agreement with 1500+ account holders.

By requesting a refund, it is obvious that the crypto exchange is trying to explore the concept of “clawback.” Noteworthy, the clawback provisions allow bankrupt companies to recover funds withdrawn by users within a certain period before the bankruptcy filing. In the case of Celsius Network, it is a 90 days period. It had initiated the clawback effort earlier this year in a bid to recover up to $2 billion.

Also, the Celsius Network drafting committee went as far as putting forward an exclusively beneficial rate for settlements agreed upon by those who had their taxes withheld. They warned against litigation if the money is not returned. It is therefore safe to say many of the entities that were indicted, were expecting it.

The post Celsius Network Resurfaces With Creditor Lawsuit, Here’s What To Know appeared first on CoinGape.