Celsius CEO Alex Mashinsky Relinquishes Entitlement to Bankruptcy Assets
In a significant move for Celsius creditors, former CEO Alex Mashinsky has decided to relinquish all rights to the defunct crypto lender's assets, paving the way for additional creditor distributions.
On Monday, Mashinsky, along with three related entities—AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC—signed an agreement, filed in the U.S. Bankruptcy Court for the Southern District of New York, forfeiting any potential bankruptcy proceeds. This agreement renders all claims submitted or scheduled by or on behalf of Mashinsky void, freeing up assets previously tied up by his claims.
With this agreement, Mashinsky and entities related to him are permanently barred from receiving any recovery in the Celsius bankruptcy. Instead, these assets will be redistributed to other creditors.
The court will maintain jurisdiction over all matters regarding this agreement, ensuring ongoing oversight of the distribution process even as Mashinsky serves his 12-year federal prison sentence for fraud, a sentence handed down in May 2023.
Recovery on the Horizon
Celsius filed for Chapter 11 bankruptcy protection in July 2022 due to a liquidity crisis stemming from risky lending practices. Since then, the company has worked diligently to transition from bankruptcy proceedings to a recovery-focused entity, with the primary goal of maximizing creditor returns.
Earlier in 2023, Mashinsky was sentenced to 12 years in federal prison for defrauding Celsius customers and manipulating the price of the CEL token. In addition to his prison term, Mashinsky was ordered to pay restitution in an amount yet to be determined.
langle Early payouts have already been distributed to over 251,000 creditors, covering approximately 93% of customer claims, and amounting to over $2.5 billion. These payouts began in August 2022 and have been made in several rounds. However, as of August 2023, roughly 121,000 eligible creditors have yet to claim their funds, most of whom are owed less than $100.
This agreement with Mashinsky is crucial in clearing the path for additional funds to be distributed to eligible creditors. With Mashinsky's claims no longer contesting assets, more funds will become available for distribution.
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As a result of the agreement signed by Alex Mashinsky and related entities, additional assets previously tied to Mashinsky's claims are now available for redistribution among other Celsius creditors. This development could potentially allow for further distributions to eligible creditors who are yet to claim their funds, including those with less than $100, thereby bringing more funds back into the recovery process of the defunct crypto lender.
