In brief
- Former Celsius CEO Alex Mashinsky and three related entities waived rights to bankruptcy distributions from the defunct crypto lender.
- The move allows Celsius to distribute funds previously tied up by competing claims.
- Celsius has already paid out over $2.5 billion to creditors this year.
Former Celsius CEO Alex Mashinsky has agreed to forfeit all claims to the bankrupt crypto lender's assets, clearing the way for additional creditor distributions.
The agreement, filed Monday in the U.S. Bankruptcy Court for the Southern District of New York, prohibits Mashinsky and three related entities (AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC) from receiving any bankruptcy proceeds.
All of Mashinsky's claims submitted or scheduled on his behalf be "withdrawn, disallowed, and shall receive no distribution" under the Chapter 11 bankruptcy plan. With the agreement, Mashinsky and entities related to him would be permanently barred from receiving any recovery in the Celsius bankruptcy, allowing those reserved assets to be redistributed to other creditors.
The court retained jurisdiction over all matters related to the stipulation, ensuring continued oversight of the distribution process while Mashinsky served his sentence for defrauding the very customers now awaiting their funds.
Road to recovery
Celsius filed for Chapter 11 bankruptcy protection in July 2022, following a liquidity crisis that exposed the platform's risky lending practices. The company reached two settlements to exit bankruptcy proceedings a year later, transitioning to a recovery-focused entity dedicated to maximizing creditor returns.
Last month, Mashinsky was sentenced to 12 years in federal prison for defrauding Celsius customers and manipulating the price of the CEL token.
Former Celsius Network CEO Alex Mashinsky Sentenced to 12 Years in Prison
Former Celsius Nework CEO Alex Mashinsky received a 12-year prison sentence on Thursday for misappropriating Celsius customers’ funds and manipulating the price of the lender's token, CEL. Mashinsky, 58, pled guilty to one count of committing commodities fraud and one count of committing securities fraud last December. He was initially indicted on seven charges, including two counts of wire fraud and a fraudulent scheme to manipulate the price of CEL. Prior to Mashinsky's sentencing, federal pro...
At the time, prosecutors said he used customer funds to enrich himself and repeatedly misled investors about the company’s financial health.
Prosecutors had sought a 20-year sentence, which Mashinsky's lawyers characterized as a "death-in-prison sentence," arguing his military service and December guilty plea warranted leniency.
By August 2024, over $2.5 billion had been distributed to around 251,000 creditors across several payout rounds, covering 93% of total claims including nearly two-thirds of eligible creditors from 165 countries.
Still, according to the August 2024 court filing, roughly 121,000 eligible creditors have yet to claim their funds, most of whom are owed less than $100.
