Celsius Initiates Asset Distribution as FTX Repayment Plan Gains Approval

Celsius and FTX, two prominent CeFi insolvencies during the recent bear market, have outlined plans for asset distributions to creditors.

Celsius Begins Asset Distribution

On January 31, Celsius announced the commencement of distributing $3 billion worth of cryptocurrency and fiat to its creditors. The announcement followed Celsius account holders voting in favor of the reorganization plan with 98% support in November. The plan also led to the formation of a new Bitcoin mining company, Ionic Digital, owned by Celsius creditors and managed by Hut 8, a Nasdaq-listed Bitcoin mining firm. Ionic Digital's CEO is Matt Prusak, Hut 8's Chief Commercial Officer.

Celsius filed for bankruptcy in July 2022 after halting user withdrawals. A settlement with the U.S. Federal Trade Commission in July 2023 found that Celsius had misappropriated over $4 billion worth of customer funds prior to suspending operations.

FTX's Repayment Plan Approval

On the same day, a U.S. bankruptcy court approved FTX's plans to liquidate around $7 billion worth of recovered assets to repay users. The repayment plan, distributing assets based on crypto prices as of November 2022, faced criticism from users due to the significant increase in asset values since then. However, the judge dismissed complaints, stating that U.S. bankruptcy law dictates debts be repaid based on asset values at the time of the bankruptcy filing.

FTX, co-founded by Sam Bankman-Fried, who was convicted in November on charges including wire fraud and securities fraud, intends to investigate the legitimacy of claims from its 9 million customers. The current ownership has no plans to resume FTX's operations.

Conclusion and Future Actions

Celsius' asset distribution marks the conclusion of an 18-month process, providing relief to creditors and incorporating innovative ventures like Ionic Digital. FTX's approval for asset liquidation offers potential repayment to users but faces scrutiny over valuation timing. The ongoing investigations and legal proceedings underscore the complexities involved in resolving insolvencies within the crypto industry.

In summary, Celsius and FTX navigate their insolvencies with asset distributions and repayment plans, signaling progress amid legal and regulatory challenges.