According to Cryptoslate, the bankrupt cryptocurrency lending company Celsius Network has started taking legal action against account holders who made large withdrawals (over $100,000) within 90 days prior to the company’s bankruptcy filing, but refused to reach a settlement with the company.
According to a previous report by Zombit, the bankruptcy trustee of Celsius has been reaching out to platform customers who withdrew over $100,000 from the platform before its closure in order to recover potential outflow funds and repay customers who did not withdraw in a timely manner. According to the trustee, this clawback is expected to affect 2% of Celsius customers who collectively withdrew 40% of the company’s assets within 90 days prior to the Chapter 11 bankruptcy filing.
Reportedly, Celsius has reached settlements with over 1,500 account holders regarding over $500 million in priority debts and has successfully recovered nearly $100 million, providing significant relief to Celsius creditors. Celsius’ litigation manager, Mohsin Meghji, explained that a significant amount of withdrawals during the period from April 14, 2022, to July 13, 2022, led to a severe imbalance in the company’s financial condition, ultimately resulting in the bankruptcy filing.
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