Celsius Network's bankrupt customers face legal action for making large withdrawals before the bankruptcy filing. Those who withdrew over $100,000 within 90 days of the filing must settle their claims or face legal consequences. A proposed settlement plan offers to release actions against eligible account holders for a 27.5% payment, with a deadline of January 31, 2024.
Our analysis of the situation
In the wake of the Celsius Network's bankruptcy declaration, a surprising legal confrontation has emerged, with customers who made substantial withdrawals within 90 days prior to the filing now facing the daunting prospect of legal action from bankruptcy managers.
The crux of the issue revolves around customers who made withdrawals exceeding $100,000 during the specified 90-day period, thereby finding themselves in the crosshairs of a legal dispute. An official filing has been issued, detailing the steps for resolving their withdrawal preference exposure.
Withdrawal preference exposure, as outlined in the notice, encompasses the total value of assets withdrawn from the Celsius Network platform during the specified period, minus any subsequent deposits made after the initial withdrawal.
Customers found to have withdrawal preference exposure surpassing $100,000 have been tasked with settling their claims or securing a court order ruling to avert potential liability. In a move labeled as the Account Holder Avoidance Action Settlement under the Modified Joint Chapter 11 Plan of Reorganization, debtors will waive avoidance actions against eligible account holders who meet specific criteria by providing a payment equal to 27.5% of their withdrawal preference exposure.
The clock is ticking for affected customers as the payment deadline has been extended to accommodate settlement of their withdrawal preference exposure. Those electing to make the settlement payment must submit the election form by January 25, 2024, with an anticipated effective date of the plan around January 31, 2024.
The heat is on for customers facing this unexpected legal ordeal, while the broader crypto community eagerly awaits the fallout from this unfolding bankruptcy saga. The resolution of the Account Holder Avoidance Action Settlement promises to offer clarity on the handling of withdrawal preference exposure claims and the subsequent distribution of funds.
As the dust settles, this legal tussle within the crypto space serves as a vivid reminder of the complexities and challenges inherent in navigating the financial landscape of digital assets. Stay tuned for further developments as this gripping drama unfolds.
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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