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Celsius Creditors Get 57.9% Liquid Crypto Distribution as Firm Wraps Up Bankruptcy

Its reorganization plan includes the creation of a new Bitcoin mining company – Ionic Digital – which will be owned by Celsius’ creditors and will have its mining operations managed by Hut 8 Corp.

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Celsius Network, the once high-flying crypto lender, has closed its bankruptcy saga, doling out over $3 billion in crypto and fiat to its creditors. While they are expectedly walking away with a smaller pocketful of cash than what they started with; they're also getting a slice of the crypto pie in the form of stakes in the newly minted Ionic Digital Inc. mining operation, according to an announcement on Wednesday.

After 18 months in bankruptcy court, about 98% of Celsius Network’s creditors gave a thumbs up to this plan. Ionic aims to become a publicly traded company, pending the usual red tape and approvals.

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The duo at the helm of this ship, David Barse and Alan Carr of the special board committee, seemed almost surprised themselves. “When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time,” they stated, perhaps with a hint of glee. But they secured Celsius' crypto stash, haggled a deal with creditors, and reorganized a part of the company to keep the lights on.

Matt Prusak, chief commercial officer of Hut 8, is being named as the CEO of Iconic.

Let's not forget the juicy subplot - the $4.7 billion settlement with U.S. authorities over fraud allegations. Former CEO Alex Mashinsky, who dipped out in September 2022, was arrested on fraud charges for allegedly fiddling with the price of the lender's CEL token. He denies the allegations, but his assets are now frozen, and he's got a $40 million bond and a court date in September 2024 to keep him warm at night.

How much will you be getting back?

Holders’ claims are valued as of the petition date on July 13, 2022, when BTC traded at $19,881, and ETH traded at $1,088. If you did not opt out of the settlement, you get a 5% bonus on your claim.

According to the court filing on the effective date (16 January 2024), everyone who had a Celsius earn account will receive 30.5% of their claim in BTC and 27.4% of their claim in ETH (no matter what asset you held on that platform). Prices on the effective date were $42,972.9948 for BTC and $2,577.4752 for ETH.

So to calculate how much you'd be receiving back in BTC before the 5% bonus, multiply your bills claim by .305, then divide that by the BTC price on the effective date. For what you'd receive in ETH, do the same, but multiply your bills claim by .274. Or just use the creditor recovery calculator prepared by CelsiusFacts on Twitter/X.

While creditors aren't getting back as much as many they expected, it's happening much faster than Mt. Gox repayments.

As for how creditor payouts will happen, PayPal and Coinbase have been tagged in to distribute the cryptocurrencies to them, as Celsius' web and mobile applications are set to be shut down by the end of February. The distributions are supposed to begin on 31 January.

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