Cryptocurrency lending firm Celsius, currently facing bankruptcy, has submitted a request to the court seeking relief regarding the distribution of funds obtained from the sale of its self-custody platform, GK8.
According to the filing made by Celsius Network’s debtors on July 17, an agreement has been reached among the Series B holders to allocate $25 million from the proceeds of GK8’s sale.
This settlement was agreed upon by the debtors, the creditors’ committee, and the initial consenting Series B preferred holders.
The document outlines that $24 million will be designated for legal expenses, while the remaining $1 million will be distributed among the holders.
The debtors have shown support for this proposed allocation, emphasizing that the primary objective of the settlement is to reduce administrative costs.
The filing states that the proposed allocation provides reciprocal benefits to the initial consenting Series B holders.
The settlement agreement was primarily based on the mutual desire to avoid expensive litigation and a lengthy confirmation process, which would entail additional professional fees.
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The document highlights the benefits of the settlement, stating that it not only unlocks substantial value for the creditors but also provides clarity and certainty for all parties involved.
Consequently, the filing requests the court to overrule any objections and grant the relief sought in the motion.
Celsius had acquired the Israeli self-custody startup GK8 in late 2021 for $115 million but was compelled to sell it as part of the restructuring plan following the company’s collapse in 2022.
The investment firm Galaxy Digital, led by Mike Novogratz, emerged as the winner of the bidding process to purchase GK8 in late 2022.
As part of the acquisition, Galaxy obtained GK8’s team of 40 experts and their Tel Aviv office. In July 2023, GK8 held a meeting with financial executives at its New York offices.
These recent developments come at a time when Celsius is grappling with various legal challenges.
On July 13, the United States Securities and Exchange Commission filed a lawsuit against Celsius, coinciding with reports of the former CEO Alex Mashinsky’s arrest.
Additionally, the U.S. Federal Trade Commission imposed a $4.7 billion fine on Celsius on the same day.
Mashinsky, after pleading not guilty to charges of misleading customers and inflating the Celsius CEL token, was released on bail of $40 million.
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