Celsius Network LLC, which is insolvent, has negotiated a settlement to make things simple for the company in court.
If many account holders are interested in taking part in a litigation settlement involving accusations of management malfeasance, it is reportedly offering to pay 5% extra on its claims.
By entering into these agreements, Celsius Network may find it simpler to have a judge approve its plan to liquidate its bankruptcy and return consumers’ assets.
A bonus to the assets account holders would receive under the company’s Chapter 11 plan will be used to settle the unsecured creditors’ committee’s class action fraud claim against Celsius, according to a joint motion released by Celsius and the committee.
They asserted that doing so would speed up the return of cryptocurrencies to customers’ hands and save “astronomical” amounts of money. The proposed settlement with the committee of unsecured creditors “avoids the delay and costs of potentially protracted litigation,” the cryptocurrency lender argued in a motion to approve the settlement filed with the US Bankruptcy Court for the Southern District of New York on Thursday.
There are ongoing legal claims against Celsius totaling more than $70 billion that have nothing to do with the obligations it has under the contracts it has with its clients, according to the settlement motion Celsius and the committee submitted on Thursday.
It’s important to note that every account holder can decline the settlement and continue to pursue their proof of claim against the creditors, according to the statement. Because they negotiated their agreement with Celsius in March, the settlement does not include owners of so-called “Custody” accounts.
Agreement To Lower Litigation Costs
According to committee lawyer Aaron Colodny in an email delivered on Friday, the deal will reduce legal costs, and the amount of bitcoin Celsius will need to keep in reserve for contested claims.
The Federal Trade Commission and the bankrupt cryptocurrency exchange had already reached a $4.7 billion settlement. Alex Mashinsky, the former CEO of Celsius, was taken into custody last week on suspicion of federal securities fraud.
