CeFi Giants Celsius and FTX Unveil Plans to Reimburse Creditors as Bearish Woes Persist
Celsius distributes $3b to creditors, launches Ionic Digital; FTX faces controversy over asset repayment timeline.
Bankrupt crypto lender Celsius has commenced the distribution of $3 billion in cryptocurrency and fiat to its creditors, as revealed on January 31, in a move that comes after an overwhelming 98% support from Celsius account holders for the reorganization plan in November.
Part of the restructuring involves the establishment of a new Bitcoin mining entity named Ionic Digital, owned by Celsius creditors and managed by Nasdaq-listed Bitcoin mining firm Hut 8. Matt Prusak, Chief Commercial Officer of Hut 8, assumes the role of CEO at Ionic Digital.
Celsius, which had paused withdrawals for over 18 months, expressed satisfaction in achieving this milestone. The company highlighted the resolution of complex legal issues, cooperation with regulatory investigations, and the recent conversion of $250 million worth of altcoins into BTC or ETH in preparation for distributions.
FTX, another casualty of the cryptocurrency downturn, also made headlines as a U.S. bankruptcy court approved plans for the liquidation of approximately $7 billion in recovered assets to reimburse users. However, the repayment plan has sparked controversy, distributing assets based on November 2022 crypto prices, drawing criticism from users as BTC and ETH prices have surged by 150% and doubled, respectively.
Despite customer complaints, U.S. bankruptcy judge John Dorsey emphasized adherence to bankruptcy law, indicating that repayments must be based on asset values at the time of FTX's bankruptcy filing in November 2022.
FTX's troubles extend beyond the asset distribution, with ongoing investigations into the legitimacy of claims from its 9 million customers. In October, FTX pledged to allocate a minimum of 90% of recovered assets to claimants, but the timeline for disbursement remains uncertain.
In a courtroom statement, FTX attorney Andy Dietderich labeled FTX as an "irresponsible sham" created by convicted felon Sam Bankman-Fried, the co-founder and former CEO. Bankman-Fried, convicted on charges including wire fraud and money laundering, faces sentencing on March 28 with the potential for a 115-year prison term.
Dietderich clarified that the current ownership of FTX has no intentions of resuming the exchange's operations. The future remains uncertain for both Celsius and FTX as they navigate the aftermath of insolvency during challenging market conditions.