Celsius Network Sets Deadline for Bankruptcy Claims

Bankruptcy Claim Deadline for Celsius Network

Celsius Network, a once-prominent crypto lending platform, has filed for bankruptcy following a severe liquidity crisis. The U.S. Bankruptcy Court for the Southern District of New York approved a motion setting January 3, 2023, as the deadline for customers to file proof of claims. Affected parties, including individuals and organizations, can submit claims via mail, in person, or online through the claims agent, Stretto. Celsius has communicated this deadline through various channels, including social media and app notifications.

Insufficient Financial Controls

An independent examiner revealed that Celsius had inadequate accounting and operational controls over customer funds. This lack of oversight has drawn significant scrutiny, with allegations that the company used new customer assets to pay existing yields and facilitate withdrawals. This led to a court-ordered investigation into whether Celsius operated as a Ponzi scheme.

Leadership Changes and Financial Troubles

Celsius filed for bankruptcy protection under Chapter 11, seeking to restructure its business amid the industry-wide liquidity crisis. The company's CEO, Alex Mashinsky, stepped down in September amid accusations of poor trading decisions and withdrawing $10 million from company accounts shortly before suspending customer withdrawals.

Industry Implications

The Celsius case highlights ongoing challenges in the cryptocurrency industry, particularly concerning financial management and transparency. Investors and former users continue to face uncertainty, as seen in other recent crypto platform failures like FTX. The broader industry is responding, with major exchanges committing to proof of reserves to regain trust. These events underscore the critical need for robust financial controls and transparency in the rapidly evolving crypto market.