If the court approves Celsius' request, the bankrupt lender will use $24 million to cover its legal expenses.
Bankrupt cryptocurrency lending company, Celsius, is seeking the court's approval to channel the proceeds from its GK8 platform sale toward resolving its legal challenges.
On July 17th, a filing was lodged in court by the Celsius Network's debtors, outlining an agreement struck with its Series B investors.
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The consensus was achieved between the debtors, the committee representing the creditors, and the consenting initial Series B preferred holders. This agreement intends to distribute $25 million, representing the profit made from the sale of GK8, allocating $24 million for legal fees and $1 million to holders.
In particular, the debtor filing reads:
In light of the fact that the primary purpose of the settlement is to reduce administrative costs, the debtors agreed to and remain supportive of the proposed allocation, which provides the initial consenting Series B holders with reciprocal benefits.
Furthermore, the court document reveals that the settlement was anchored on a “mutual desire” to avoid expensive court proceedings and a lengthy approval process, which would increase professional fees. The document quotes:
The settlement not only unlocks tremendous value for the debtors’ creditors but also affords the debtors and all parties priceless certainty of the way forward. For the reasons set forth herein and the motion, the court should overrule the objections and grant the relief requested in the motion.
In 2021, Celsius acquired the Israeli self-custody startup GK8 for $115 million. The company's financial crisis in 2022 made it sell GK8 as a component of its restructuring plan.
Galaxy Digital, an investment firm steered by Mike Novogratz, clinched the acquisition of GK8 in 2022.
Currently, Celsius is battling several legal obstacles. On July 13th, the United States Securities and Exchange Commission lodged a lawsuit against Celsius. This coincided with news regarding the arrest of the former CEO, Alex Mashinsky.
The proceeds from the GK8 sale, if approved by the court for legal and administrative costs, could provide significant support to Celsius in its ongoing legal battles and financial woes.
