Celsius, a bankrupt cryptocurrency lender, has announced that the majority of eligible creditors have received their liquid crypto distributions through its two distribution agents: PayPal and Coinbase. In a recent court filing, the legal team representing Celsius, Kirkland & Ellis, provided an update on the creditor distributions outlined in the restructuring plan. This comes after Celsius announced its exit from bankruptcy, which it initially filed for in July 2022.
According to Kirkland & Ellis, PayPal facilitates crypto distributions to holders in the United States, while Coinbase manages overseas holders as the distribution agent. The lawyers stated that creditors have received $2 billion worth of crypto, including 20,255.66 Bitcoin (BTC) and 301,338.77 Ether (ETH).
However, the filing explained that account holders who did not agree to the restructuring plan will not receive any distribution until their individual claims are resolved. It also noted that certain account holders may face challenges in receiving their distribution if Coinbase or PayPal flags any Anti-Money Laundering (AML) or compliance issues. The filing states that the distribution agents have the discretion to refuse distributions to individuals who do not meet their compliance and other requirements.
There has been speculation within the crypto industry about how the actions in the restructuring plan might impact the broader crypto market. Cointelegraph previously reported that Celsius began recalling and rebalancing its crypto assets to ensure timely distributions to creditors. However, blockchain analytics firm Nansen pointed out that almost a third of the ETH in the pending withdrawal queue belongs to Celsius.
In October 2023, Celsius requested court approval for its restructuring plan, aiming to repay creditors before the end of 2023. Meanwhile, the former CEO of Celsius, Alex Mashinsky, is scheduled for trial in September 2024 regarding the collapse of Celsius. However, his legal team is facing scrutiny for a potential conflict of interest, as it also represents Sam Bankman-Fried, the former CEO of bankrupt crypto exchange FTX. US Prosecutors recently raised concerns about the involvement of lawyers Marc Mukasey and Torrey Young in both cases.
Cointelegraph also reported that the US government called for a Curcio hearing to address the potential conflict of interest and the involvement of the two lawyers in the cases of Bankman-Fried and Mashinsky.