Bankrupt crypto lender Celsius has initiated its third round of distributions, sending out $220 million to creditors. The ongoing payments are part of Celsius’s restructuring plan, which aims to return funds to customers who had their assets frozen after the company’s collapse.
Celsius disclosed on August 20 that it has initiated its third distribution round, which comprises $220.6 million. This results in a total recovery of 64.9% of creditor claims. The company has stated that the repayment will be distributed through platforms such as Venmo, Hyperwallet, PayPal, Coinbase, cryptocurrency, and cash.
The distribution results from two payment rounds: a $127 million distribution in November 2024 and a $2.53 billion payout to over 251,000 creditors in early 2024.
The reorganization plan, which was approved by 98% of creditors in 2023, is designed to achieve an eventual recovery of 67%–85%. Additionally, creditors may receive stock from Celsius’s mining arm in Ionic Digital Inc., a Bitcoin mining corporation.
Celsius has requested that eligible creditors revise their information through the official claims portal to prevent payment delays. Repayment eligibility may be impacted by ongoing legal and regulatory issues, which may result in additional delays for certain claimants.
Celsius’s collapse to partial recovery
The primary causes of Celsius’s bankruptcy in July 2022 were inadequate liquidity management, market volatility, and risky financial practices. The platform, dependent on leveraged trading and unsecured lending, advertised annual returns of up to 18% at its zenith.
Celsius was compelled to halt withdrawals and ultimately file for Chapter 11 with a $1.2 billion deficit due to the 2022 market collapse, which Terra-Luna and decentralized finance losses exacerbated.
The collapse resulted in losing billions of dollars in customer funds, regulatory crackdowns, and litigation against its leadership. Even though the repayment period has now passed the halfway point, many creditors continue to experience a delayed recovery that falls short of full compensation.
