Celsius, the bankrupt crypto lender, is taking steps to reclaim over $2 billion from customers who made major withdrawals in the three months preceding its bankruptcy. The company has begun demanding these customers to return their funds or face potential legal action.
Letters have been sent to customers who withdrew more than $100,000 each between April 14 and July 13, 2022, collectively totaling over $2 billion before Celsius filed for bankruptcy in July 2022. According to Bloomberg, these recovered assets will be used to repay creditors who did not withdraw funds from Celsius.
Customers who received the letter are being notified that their large withdrawals unfairly benefited them at the expense of other account holders. Despite accounting for less than 2% of Celsius users, these withdrawals constituted nearly 40% of the platform’s assets.
To reclaim the $2 billion, Celsius is invoking the clawback provision, a legal strategy in bankruptcy law aimed at equitably redistributing assets among creditors and preventing preferential treatment.
The administrator overseeing the process is offering affected customers a “favorable rate” to settle the matter. Those who decline may face the possibility of returning a larger sum through potential legal proceedings.
Celsius had previously alerted creditors in January about the potential need for customers who made significant withdrawals before the bankruptcy to return some funds or face legal consequences. However, customers who withdrew less than $100,000 during that period are not obligated to return their funds.
