Michaela Alvez
Celsius Network, the now-defunct crypto lending platform, has filed an appeal following Judge John Dorsey’s dismissal of its claims for damages against FTX in its bankruptcy proceedings.
On December 31, Mohsin Meghji, Celsius’ litigation administrator along with its affiliated debtors, submitted a notice of appeal challenging Judge Dorsey’s memorandum opinion and order.
Dorsey’s ruling rejected Celsius’ claims for $444 million in damages from FTX. This decision is part of the ongoing bankruptcy process of the defunct crypto exchange, led by Sam Bankman-Fried, aimed at settling claims and repaying creditors.
The platform has been seeking to recover hundreds of millions from FTX. It originally claimed $2 billion in damages due to “disparaging statements” made by FTX officials, which they argue contributed to the platform’s downfall.
Celsius subsequently adjusted its claim, shifting the focus to “preferential transfers” that favored certain creditors over others. It now seeks $444 million in damages.
In December 2024, Judge Dorsey dismissed both claims, ruling that the initial proofs, which merely mentioned a brief sentence about investigating potential preference claims, lacked the necessary details to support their case.
The court ruled that Celsius’ amended proofs of claims, filed in July 2024, were invalid. The changes were deemed improper because the firm failed to seek permission to amend and that they were not closely related to the original claims. No justification was provided for the delay, and allowing the amendments would have hindered FTX’s reorganization process.
An August 2024 court filing revealed that Celsius had repaid approximately $2.53 billion to nearly 250,000 creditors, covering around 84% of the total debts. In late November, the platform announced plans to distribute an extra $127 million to creditors from its litigation recovery fund.
In early December, former Celsius CEO Alex Mashinsky admitted guilt to two counts of fraud related to the company’s downfall. The U.S. Department of Justice (DOJ) charged Mashinsky with securities fraud, alleging that he deceived Celsius customers about the company’s financial stability and mishandled their funds. Mashinsky was also accused of secretly inflating the value of Celsius’ token (CEL) to profit from selling his holdings at artificially high prices.
Read More
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- Celsius CEO Fails to Dismiss Fraud Charges in New York Court
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
