Celsius Reaches Settlement With Series B Holders Over $25M GK8 Sale
- The bankrupt crypto lender has agreed on a settlement with its Series B holders on how to distribute the $25 million from the sale of self-custody platform GK8.
- The majority of funds, $24 million, will be allocated for legal expenses, while the remaining $1 million will be distributed between the Series B holders.
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Bankrupt crypto lender Celsius has requested that the court agrees to a settlement that will distribute $25 million from its sale of self-custody platform GK8, court documents from 17 July show.
According to the filing, Celsius Network and its Series B holders have agreed on a settlement to distribute $25 million from the proceeds of its GK8 sale to the shareholders and for legal fees. Under the agreement, $24 million will be allocated for legal expenses, while the remaining $1 million will be equally distributed to all Series B preferred shareholders.
The motion was filed by the largest group of Series B shareholders — despite some internal disputes over the allocation of the funds — who are now urging the court to approve the proposed settlement so that the company could move forward with its bankruptcy process. The shareholders noted in the filing that the settlement was borne out of a “mutual desire” to reduce administrative costs, and to avoid a costly litigation and confirmation processes, which would only increase the professional fees. The filing reads:
“The Settlement brings an end to nearly a year of highly contentious litigation and removes one of the largest obstacles to confirmation and emergence in exchange for a $25 million cash settlement from the proceeds of the GK8 sale and a mutual release of claims between the Initial Consenting Series B Preferred Holders and the Estate Parties.”
Celsius acquired self-custody platform GK8 in late 2021 — shortly after closing its oversubscribed $750 million Series B funding round — for $115 million. The company, however, filed for Chapter 11 bankruptcy in July 2022 and several months later agreed to sale GK8 to Mike Novogratz’s Galaxy Digital for an undisclosed sum as part of its restructuring plan.
The requested settlement comes almost a week after the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC) filed separate lawsuits against Celsius and its former CEO Alex Mashinsky, who was arrested in New York on 13 July.
- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.
Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
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- The EOS Network Foundation is calling on the EOS community to opt-out from the proposed settlement as it “does not adequately compensate” for the losses caused by Block.one.
- Not only are the $22 million a tiny fraction of the $4 billion raised during the EOS ICO, but the settlement will also bar community members for filing future complaints against the company.
- The U.S. SEC, CFTC, and FTC have all filed separate lawsuits against bankrupt crypto lender Celsius and its former CEO Alex Mashinsky, charging them with multiple counts of fraud.
- Mashinsky was also arrested in New York on Thursday, and later charged by the Department of Justice with securities fraud, commodities fraud, and wire fraud.