Celsius Appeals Court Ruling in FTX Bankruptcy Case

Celsius Appeals Court Ruling- Celsius’ Legal Battle with FTX: What’s Next?

Celsius Appeals Court Ruling– The collapsed crypto lending platform Celsius has filed an appeal against a recent court ruling that rejected its claims for damages from FTX in its ongoing bankruptcy proceedings. Celsius has been attempting to recover hundreds of millions of dollars from FTX, initially demanding $2 billion in damages, which it argued were caused by disparaging statements made by FTX executives. These statements, Celsius contended, led to the firm’s downfall. However, Celsius later revised its claim to focus on “preferential transfers” involving special treatment given to certain creditors, ultimately seeking $444 million in damages.

Court Rejects Celsius’ Claims for FTX Damages

In December, U.S. Bankruptcy Judge John T. Dorsey ruled that Celsius’ claims for damages against FTX were insufficient. The court found that the initial claim, which only included a brief sentence mentioning possible preference claims, did not meet the necessary standards to preserve those claims. Consequently, both of Celsius’ requests for damages were dismissed.

Celsius Files Appeal Against Judge Dorsey’s Ruling

Following Judge Dorsey’s decision, Celsius Network and its affiliated debtors filed a notice of appeal on December 31. Mohsin Meghji, the litigation administrator for Celsius, submitted the appeal regarding the court’s memorandum opinion and order. The appeal challenges the dismissal of Celsius’ damage claims, specifically the claims related to both disparaging statements and preferential transfers.

Details of Celsius’ Claims and Amendments

Celsius initially filed a $2 billion claim based on allegations that FTX officers made “unsubstantiated and disparaging statements” about the firm’s financial health. After the bar date, the company amended its claim, reducing the amount to $444 million. The amended claim argued that certain transfers made to FTX entities should be returned to Celsius’ bankruptcy estate. However, the court found that the amendments were improperly filed because Celsius had not sought permission to make them. Additionally, the court noted that the amendments were not sufficiently related to the original claim and could potentially prejudice FTX’s reorganization process.

Celsius’ Arguments and Bankruptcy Progress

Celsius, however, maintains that its original proofs of claim were adequate to notify the debtors about potential avoidance claims. According to Celsius, the initial claims should be considered protective proofs sufficient under the Bankruptcy Code. As of August 2024, Celsius had repaid approximately $2.53 billion to around 250,000 creditors, recovering about 84% of the assets owed.

In late November 2024, the firm also indicated plans to distribute an additional $127 million to creditors from its litigation recovery account. Despite a brief surge in the value of Celsius’ native token (CEL), which spiked by 350% to $0.56 in September following the $2.5 billion repayment, CEL’s value has since plummeted, dropping by 97.5% to below $0.20 at the time of writing.

What’s Next for Celsius in Its Bankruptcy Case?

As Celsius continues to appeal the court’s ruling, the future of its bankruptcy case remains uncertain. The company’s efforts to reclaim funds from FTX highlight ongoing disputes in the crypto lending sector, as the fallout from these bankruptcies continues to unfold.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.