A US bankruptcy court on Monday approved a request by broken cryptocurrency lending firm Celsius to set a deadline for its clients to present proof of ownership of assets frozen by the company, in the ongoing bankruptcy process.
“The Bankruptcy Court passed our motion for a cut-off date, which is the deadline for all clients to file a claim. The end date has been set for January 3, 2023,” Celsius wrote in a post on twitter on Sunday.
According to Celsius, the company claims that the Stretto agent will notify customers of the deadline and its next steps via email, or physical mail to customers with a registered address.
This week, the bankruptcy court approved our motion to set the bar date, which is the deadline for all customers to file a claim. The bar date has been set for January 3, 2023.
— Celsius (@CelsiusNetwork) November 20, 2022
In addition, customers must receive an in-app notification from Celsius.
The Court also listed several categories for which customers will not be required to provide proof of claim.
They include customers whose claims are not anticipated to be “disputed”, “contingent” or “unsettled”, as well as cases where the claimant does not disagree with the amount, nature and priority of the claim.
Customers should expect to receive a notice regarding the bar date and next steps in the proofs of claim process from our claims agent, Stretto, via email, physical mail for those customers with an address on file, and through a notification in the Celsius app.
— Celsius (@CelsiusNetwork) November 20, 2022
The fall of Celsius
Celsius became one of the first major crypto lenders to freeze user withdrawals following the crypto market crash in June of this year following the collapse of the Terra project. After weeks of silence, the company filed for bankruptcy, revealing a $1.2 billion shortfall in its balance sheet.
Celsius CEO Alex Mashinsky, who was reportedly responsible for a string of bad deals in early 2022, resigned in September. Mashinsky allegedly withdrew as much as $10 million from the company’s account in May 2022, several weeks before the company stopped withdrawals.
In September, the Vermont Department of Financial Regulation alleged that Celsius had been secretly insolvent since 2019 and that the CEO had made false and misleading statements to exaggerate the company’s financial health.
The company also faces allegations of running a Ponzi scheme, with US Bankruptcy Court Judge Martin Glenn asking the Court-appointed examiner and the Official Committee of Celsius’ Creditors to decide who will conduct an investigation into the use of customers by the company.
At the time, Greg Pesce, counsel for the Creditors Committee, told the Wall Street Journal that, “we don’t know if Celsius was a Ponzi scheme, but there are signs that show that it was,” adding that the investigation is “looking into whether this really is it.”
The expanded scope of the investigation into Celsius’ operations now also includes the company’s marketing practices and representations made to welcome new customers, as well as the management of CEL, the platform’s native token.
The next hearing in the Celsius case is scheduled for December 5.
*Translated by Gustavo Martins with permission from decrypt🇧🇷
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