Creditors of Celsius Small Business Demand Repayment Following 35 Reduction in Claims

A married couple who owned Celsius corporate accounts has filed a motion to receive a second disbursement from the bankruptcy after they and other creditors allegedly received a 35% reduction to their payment when compared with non-corporate accounts.
The motion was filed on June 3, and a hearing will reportedly be held to consider it on June 27. The motion comes after widespread complaints from corporate creditors who have alleged that the Celsius debtors delayed payments to corporate accounts and paid cash instead of crypto, causing losses to these creditors.
According to the filing, four companies, BFaller RD, BFaller ROTH RD, SFaller TRD RD, and SFaller RD, collectively known as the “Faller Creditors,” are seeking an order approving further distribution under the Celsius bankruptcy plan. The four companies are Individual Retirement Accounts (IRAs) owned by Sheri Anne Faller and Bernard Jacob Faller, according to business records in the State of California.
These four IRAs held over $1 million worth of cryptocurrency in their Celsius accounts prior to the platform’s bankruptcy petition date, the document stated. Under the negotiated bankruptcy plan, this claim was reduced to $634,337.93 worth of Bitcoin (BTC) and Ether (ETH) to be paid out on the distribution date of Jan. 16. This was approximately 7.38 BTC and 123 ETH owed to the two individuals.
However, the Celsius debtors allegedly failed to make the payments by the Jan. 16 deadline. On Jan. 19, a representative of Celsius told the two individuals that they would not be allowed to receive cryptocurrency payments since their accounts were not in the cut-off of the first 100 corporate Celsius accounts in terms of the value of their assets. Instead, the cryptocurrency would need to be converted into cash and paid out through the banking system.
The couple initially agreed to be paid the Jan. 19 cash value of the cryptocurrency held. However, debtors still did not pay them, they claim. On Feb. 13, the two creditors demanded that they be paid in crypto, “given the delay.” In response, the debtors reportedly told them again that they could not be paid in cryptocurrency since they were not in the top-100 list of corporate creditors.
The two creditors finally received a wire transfer of $414,733 on Feb. 22. However, they claim that they were not allowed to withdraw these funds until March 8. They received additional payments on April 22 totaling approximately $219,602, for a combined total of $634,335.
The couple claims that the cash value of these payments is far less than the value of the BTC and ETH they were owed, based on prices prevailing on the date they received the payments. By their calculations, they should have received $973,955, the equivalent value of the BTC and ETH they were promised. They are, therefore, demanding an additional $338,611 plus interest payments of $11,984 for holding their cryptocurrency past the required distribution date, for a total of $350,596.
The Faller creditors are not the only businesses that have complained that they were treated unjustly by Celsius when compared to the top corporate accounts or individuals. In March, Cointelegraph was contacted by the director of a corporate creditor who claimed that he received 30% less than he had agreed to under the plan.
According to another Celsius corporate creditor, Wesley Chang, who also claims to have suffered losses as a result of payment delays, an omnibus hearing is scheduled for June 27 at 10 am EDT (2 pm UTC), and the motion will be considered at this hearing.
Celsius, a crypto lending platform founded in 2017, stopped processing withdrawals in June 2022. As a result, an estimated $2.8 billion of customer’s cryptocurrency was trapped on the platform. Its founder and former CEO, Alex Mashinsky, was indicted on seven counts of fraud for his alleged role in the platform’s collapse. His trial is scheduled for September.
After filing for bankruptcy in July 2022, Celsius has paid out more than $2 billion of creditor claims. Most creditors have received their cryptocurrency payments “without any security or operational issues,” according to a Feb. 15 court filing from the platform’s estate.