By
Chimamanda U. Martha
February 8th, 2024
Celsius explained that customers who agree to the company’s scheduling of the claims do not need to submit a proof of claim.
In the latest development with Celsius Network, a bankruptcy court has set a deadline of January 3 for customers of Celsius Network to file their claims. This will be the last date when the credits can file a Proof of Claim against the failed crypto lender.
Celsius Customers Asked to File Claims
Post the deadline, creditors who have not filed the claims won’t be eligible for the distributions from this case. After the collapse of the Terra ecosystem earlier in May, crypto lender Celsius Network came into major trouble.
Later in July, the cryptocurrency lender filed for bankruptcy protection. At its peak, Celsius Network claimed to have more than $10 billion in assets under management with more than 1.7 million users. In a Twitter thread on Sunday, Celsius wrote:
“Customers should expect to receive a notice regarding the bar date and next steps in the proofs of claim process from our claims agent, Stretto, via email, physical mail for those customers with an address on file, and through a notification in the Celsius app”.
Celsius further explained that customers who agree to the company’s scheduling of the claims do not need to submit proof of claim. Besides, there’s no further action required from them regarding this claim. “We continue to closely monitor the environment across our industry. We want to take this opportunity to assure you that data and asset security remain a top priority for all at Celsius,” said the crypto lender.
Celsius Networks said that its next hearing shall be scheduled for December 5th. At this point, the company will conduct advanced discussions around Custody and Withold accounts.
Shortfalls in Celsius Network’s Operations
A Bloomberg report on Sunday, November 20, showed that there were some shortfalls in the products and offerings of Celsius Network’s controls and operations of its product offerings related to customers’ digital assets held in their custody.
Celsius’s Custody and Withhold products were similar which allowed users to keep their digital coins in the lender while maintaining ownership for the same. The users of these products claim that they shouldn’t be lumped together with other unsecured creditors. Besides, the users also demand that they should be reimbursed in the full.
A report from examiner Shoba Pillay also finds that Celsius introduced its Custody product “without sufficient accounting and operational controls or technical infrastructure”. Due to this, custodial wallets which were overfunded by June 10, remained underfunded by $50.5 million – a 24% shortfall – by June 24.
The report also notes that with the Withhold program, “no effort was made to segregate or separately identify any assets” associated with the accounts. Pillay added:
“As a result, customers now face uncertainty regarding which assets, if any, belonged to them as of the bankruptcy filing”.
The Bloomberg report notes that these filings could complicate customers’ efforts at reimbursement.