Celsius is making headlines again with plans to distribute $127 million to creditors. On the surface, it sounds like a win, but don’t get too excited just yet. There’s more to this story than meets the eye. Strict conditions, legal twists, and lingering fallout from the 2022 crypto crash make this payout anything but straightforward.
Why are only some creditors getting paid in Bitcoin or Ethereum? What’s next for the former CEO? Let’s break it all down.
Celsius plans to pay creditors in Bitcoin (BTC), Ethereum (ETH), or U.S. dollars (USD), but there’s a catch. If you want BTC or ETH, you must have a Coinbase account. Don’t have one? You’ll automatically receive USD starting November 9, 2024.
The payouts focus on creditors under the Illiquid Recovery Rights part of Celsius’s bankruptcy plan. However, a portion of the funds is being set aside for unforeseen issues. While it’s a step forward, it’s not the full recovery many hoped for.
As creditors wait for their payments, former Celsius CEO Alex Mashinsky faces serious legal challenges. He’s accused of market manipulation and fraud, including mishandling the CEL token. Recently, a judge dismissed his attempt to drop two fraud charges.
If convicted on all seven counts, Mashinsky could face up to 115 years in prison. His trial is scheduled for January 2025, setting the stage for more courtroom drama.
Celsius’s collapse is one of the biggest casualties of the 2022 crypto winter, which wiped out billions in investments. While the payout offers some relief, it barely addresses the staggering losses many investors faced. The crypto market’s recovery remains slow and uncertain.
Who’s Really Profiting?
Amid the chaos, law firms are emerging as big winners. Kirkland & Ellis, handling multiple crypto bankruptcies, has reportedly earned $120 million in fees. While creditors get partial compensation, it’s clear that legal teams are profiting handsomely from the fallout.
For creditors, this payout is a bit of good news. But it doesn’t come close to making up for the massive losses. With Mashinsky’s trial around the corner, there’s a lot more to unfold. The crypto world has a long way to go before it recovers, and this isn’t the end of the story.
The lessons from Celsius’s fall will linger long after the payouts are complete.
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