Celsius Appeals Court Ruling in Bid to Recover Funds from FTX Amid Bankruptcy Struggles

Celsius, the embattled crypto lending platform, has filed an appeal against a court ruling that dismissed its claims for damages against the collapsed cryptocurrency exchange FTX. This legal battle comes as part of Celsius’s ongoing bankruptcy process, which aims to recover significant funds while navigating a complex financial situation.

The Legal Claims Against FTX

Celsius initially sought $2 billion in damages, accusing FTX of making misleading statements that allegedly exacerbated its financial woes. However, the company later revised its claim to $444 million, focusing on “preferential transfers.” Celsius argued that certain transactions had unfairly benefited specific creditors, further straining the company’s financial stability.

In December 2024, Judge John Dorsey dismissed both of these claims. He ruled that Celsius had failed to provide sufficient evidence to support its accusations. Additionally, the court criticized Celsius for improperly modifying its claims without permission, particularly changes made in July 2024. These alterations, the judge stated, were not connected to the original claims and would disrupt FTX’s ongoing restructuring efforts.

Celsius’s Efforts to Pay Back Creditors

Despite the legal setbacks, Celsius has made significant strides in attempting to repay its creditors. In August 2024, the company distributed $2.53 billion to more than 250,000 creditors, covering roughly two-thirds of the total claims. In November, Celsius announced an additional payout of $127 million, sourced from its recovery funds.

These efforts briefly boosted the value of Celsius’s native CEL token, which saw a 350% surge to $0.56 in September. However, the token’s value has since fallen back to $0.1960, reflecting the ongoing instability of the company and broader market conditions.

Legal Issues for Celsius Founder

Further complicating Celsius’s recovery efforts is the legal situation surrounding its founder, Alex Mashinsky. In a recent development, Mashinsky pleaded guilty to charges of fraud and manipulation of the CEL token. He is now facing a potential 20-year prison sentence, with sentencing set for April 2025. This legal turmoil has added to the uncertainty surrounding the company’s future.

The Path Forward for Celsius

Celsius’s appeal of the court’s dismissal of its claims against FTX represents another crucial chapter in its ongoing bankruptcy proceedings. The company is working tirelessly to recover funds and navigate the complexities of its financial obligations. The outcome of the appeal could have a significant impact on the company’s efforts to compensate creditors and restore its operations.

As Celsius continues to face legal challenges and manage its bankruptcy process, the case underscores the risks and complexities inherent in the volatile crypto industry. It remains to be seen whether the company can turn things around and secure a fair resolution for its creditors.