The bankrupt cryptocurrency lender Celsius, its creditors, and its Series B holders have reached a settlement with regard to the distribution of $25 million in proceeds from the sale of crypto custodian GK8.
According to the filing, the settlements seek to deploy $24 million for legal expenses while allocating the rest of $1 million among the Series B holders. The court document also states that the settlement agreement was born out of the “mutual desire” to prevent costly legal disputes and an extensive confirmation process, which would lead to higher professional fees.
The agreement between the Debtors, the Committee, and the Initial Consenting Series B Preferred Holders is said to have been “thoughtfully negotiated and is eminently reasonable.”
The filing read,
“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.”
GK8 was initially acquired by Celsius for an unknown amount, which was later disputed to be $115 million, in November 2021.
However, as Celsius filed for Chapter 11 bankruptcy protection last summer following the collapse of Terra’s ecosystem, Mike Novogratz-led Galaxy Digital agreed to purchase the Israel-based company as part of bankruptcy proceedings.
The former Celsius CEO, Alex Mashinsky, was arrested last week and charged with wire fraud and other crimes.
US prosecutors also alleged that the exec pumped up the price of his company’s cryptocurrency to lure customers to the platform.
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