Celsius bankrupt, allocates $24 million for legal expenses

The bankrupt crypto lending firm Celsius has filed a motion seeking relief for the distribution of funds resulting from the sale of GK8, a self-custody platform.

The settlement, agreed upon by the debtors, the creditors’ committee, and the initial consenting Series B preferred holders, proposes distributing $24 million for legal expenses, with the remaining $1 million to be divided among the holders.

According to the court document, the parties agreed to settle to avoid expensive litigation and a lengthy confirmation process, which could increase professional fees.

The filing emphasized that the settlement unlocks value for the debtors’ creditors and provides certainty for all parties involved.

Celsius bought GK8, a self-custody startup in Israel, for $115 million in late 2021. After it filed for bankruptcy in mid-2022, it sold GK8 as part of its restructuring plan.

Galaxy Digital, an investment firm led by Mike Novogratz, successfully acquired GK8 in late 2022, along with its expert team and Tel Aviv office.

Celsius is facing multiple legal issues in mid-July, including a lawsuit filed by the United States Securities and Exchange Commission (SEC) on July 13. This is happening at the same time as the arrest of its former CEO, Alex Mashinsky.

The SEC accuses Celsius and its co-founder and CEO of securities fraud, alleging that CEL and Celsius’ Earn product qualify as securities.

Additionally, on the same day, the US Federal Trade Commission (FTC) imposed a $4.7 billion fine on Celsius.

Mashinsky pleaded not guilty to misleading customers and artificially inflating the CEL token. He was released on bail set at $40 million.