- Celsius Network has appealed a court ruling dismissing its $444 million claim against FTX, arguing that its revised claims were improperly rejected.
- The court previously dismissed Celsius’s claims, citing insufficient detail and procedural issues with amended filings submitted after the bankruptcy bar date.
- Amid ongoing litigation, Celsius has repaid $2.53 billion to creditors and continues to address its financial obligations.
The embattled crypto lending platform Celsius Network has escalated its legal fight against FTX by notice of appeal after a judge rejected its claims for damages. This is while the company is dealing with a very complicated bankruptcy process and, simultaneously, trying to recover substantial sums of money from the defunct cryptocurrency exchange.
Celsius had initially sought $2 billion in damages, claiming that “disparaging statements” by FTX officers brought it down faster. Later, those claims were revised to center on “preferential transfers,” or treating some creditors more favorably than others. Then, the platform estimated its damages at $444 million, claiming FTX had treated it unfairly.
However, Judge John Dorsey dismissed both claims in December 2024. He ruled that Celsius’s original filings failed to provide enough detail to substantiate the claims and that its revised claims, filed after the bankruptcy bar date, were procedurally improper.
On December 31, the plateform litigation administrator, Mohsin Meghji, formally appealed Judge Dorsey’s decision. The appeal challenges the court’s determination that Celsius’s amended claims lacked sufficient connection to its original filing and that their delayed submission undermined FTX’s restructuring process.
Celsius Repays Creditors $2.53 Billion Successfully
Sunil Kavuri, an activist representative for FTX creditors, made the situation clear in a statement dated January 2. Kavuri said Celsius’s original $2 billion claim included reputational damage from meritless statements about its financial health. The platform later amended its claims to include $444 million in allegedly preferential transfers to FTX entities.
The court, however, considered the amended claims by Celsius to be insufficient. It noted that plateform had not sought court approval of the amendments and that there were no reasons given as to why such changes were made so late. Moreover, the amendments were irrelevant to the original claim and could delay the reorganization of FTX.
In its appeal, Celsius argued that its original claims gave sufficient notice of its potential avoidance claims and should satisfy the Bankruptcy Code’s requirements. The platform argued that its filings were enough to preserve its rights to seek damages despite procedural challenges.
The plateform has been working on gradually improving creditor repayments amidst bankruptcy woes. It has returned about $2.53 billion to 250,000 creditors as of August 2024, which is roughly 84% of the owed assets. It promised creditors an additional $127 million in November, from its litigation recovery funds.
Meanwhile, Celsius’s native token, CEL, has experienced dramatic price swings. After a brief surge in September following the repayment announcements, the token has since plummeted, reflecting broader uncertainties about the platform’s future.
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