Celsius Court of Appeals Ruling Dismissing Its $444 Million Claim Against FTX

Bankrupt crypto lender Celsius Network has filed an appeal challenging a court decision that dismissed its $444 million claim against defunct crypto exchange FTX.

The appeal, which is currently pending review in the District Court, is part of Celsius’ ongoing litigation efforts to recover funds from FTX.

Celsius’ initial claim

According to court documents, Celsius had originally filed a claim for up to $2 billion in damages against FTX. The claim alleged that FTX officials had made “baseless and disparaging statements” against Celsius, which undermined its reputation and hastened its collapse in 2022.

However, ahead of the July 2024 statute of limitations, the company amended the claim to $444 million, stating that the new claim would focus on “preferential transfers” that allegedly gave some creditors an advantage over others. others

In December, Judge John Dorsey, the magistrate in charge of the case, rejected both allegations. He pointed to procedural flaws in Celsius’ submissions, claiming they lacked sufficient evidence to sustain the preferences.

Judge Dorsey criticized Celsius’ amended filing, saying it was inadequate since the company did not seek court approval. It also noted that the content of the amended claims was not remotely related to the original claims and could hinder FTX’s restructuring plans.

On December 31, Celsius’ litigation administrator Mohsin Meghji officially filed a notice of appeal disputing Judge Dorsey’s decision. In the filing, Celsius argued that its initial filings met all the requirements of the Bankruptcy Code despite not having a detailed explanation.

The company intends to continue to pursue the case to recover the disputed claim.

Celsius amortization efforts

Despite its legal troubles, Celsius has made considerable progress in paying its creditors. In August 2024, the company began its repayment effort, distributing $2.5 billion in crypto and cash to more than 250,000 creditors in more than 165 countries.

In a more recent court filing in November, Celsius announced plans to pay an additional $127 million to creditors. The company noted that this second payment will be made from funds recovered through its litigation efforts.

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