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.