Celsius’ claim filings contained insufficient evidence, according to the adjudicator.
Celsius Network, an insolvent crypto lender, has filed an appeal against a court ruling that rejected its $444 million claim against the defunct crypto exchange FTX.
As part of Celsius’ ongoing litigation endeavors to recoup funds from FTX, the appeal is presently pending review in the District Court.
According to court documents, Celsius had initially submitted a claim for damages from FTX of up to $2 billion. The claim contended that Celsius’s reputation was tarnished and its collapse in 2022 was hastened by the “unsubstantiated and denigrating remarks” made by FTX executives.
Nevertheless, the company amended the claim to $444 million prior to the bar date in July 2024, asserting that the new claim would concentrate on “preferential transfers” that purportedly granted certain creditors an advantage over others.
The magistrate in command of the case, Judge John Dorsey, rejected both claims in December. He disclosed the procedural deficiencies in Celsius’ filings, asserting that they were devoid of adequate evidence to substantiate the preference claims.
Judge Dorsey criticized Celsius’ amended filing, asserting that it was unlawful because the company did not request court approval. He also observed that the amended claims were not in the slightest bit related to the original claims and could potentially impede FTX’s restructuring plans.
Mohsin Meghji, the litigation administrator of Celsius, submitted an official notice of appeal on December 31 that contested Judge Dorsey’s decision. Celsius contended in the filing that its initial filings satisfied all of the Bankruptcy Code’s requirements, despite the absence of a comprehensive explanation.
The company intends to persist in its efforts to recover the disputed claim. Celsius has made significant strides in its efforts to satisfy its creditors, despite its legal challenges. The company initiated its repayment initiative in August 2024, distributing $2.5 billion in cash and cryptocurrency to more than 250,000 creditors in more than 165 countries.
Celsius disclosed its intention to allocate an additional $127 million to creditors in a November court filing. The company clarified that the second payout will be contingent upon the recovery of funds through its litigation endeavors.
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