📰 Table Of Contents
Bankrupt Crypto Lender Celsius Demands Return of Funds from Major Withdrawals
Bankrupt crypto lender Celsius has initiated a process requiring customers who made substantial withdrawals in the three months prior to its bankruptcy to return their funds or potentially face legal consequences.
Recovery of Assets
A committee-supervised administrator has sent out letters to customers who withdrew more than $100,000 each between April 14 and July 13, 2022. The total amount withdrawn collectively exceeded $2 billion before Celsius declared bankruptcy in July 2022.
Assets recovered from these customers will be utilized to repay creditors who did not withdraw funds from Celsius, as reported by Bloomberg.
Rectifying ‘Unfair’ Withdrawals
Customers who received the letter were informed that those who made significant withdrawals had unfairly benefited at the expense of other account holders. Less than 2% of Celsius users initiated these withdrawals, yet they accounted for almost 40% of the platform’s assets.
Clawback Provision Strategy
Celsius aims to recover the $2 billion withdrawn through a legal mechanism known as the clawback provision. This provision, a part of bankruptcy law, ensures the equitable redistribution of assets among creditors in cases of insolvency, preventing preferential treatment and upholding the bankruptcy process’s integrity.
‘Favorable Rate’ Offer
The administrator mentioned in the letter that a “favorable rate” would be offered to customers who agree to settle. Those who refuse the settlement may face the possibility of returning a larger sum through potential legal actions.
While recovering funds from innocent parties may seem stringent, it guarantees fair treatment for all creditors, ensuring an equal distribution of available assets.
Customers who withdrew less than $100,000 before the bankruptcy are not required to return their funds.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
