Hey folks, if you’ve been following me over this past year, I’ve written about the Celsius bankruptcy proceedings several times, and now, finally, it looks like there’s light at the end of the total. With a full disclaimer that I’m not a lawyer or an accountant, to my layman’s understanding, today I’m going to try to break down in the simplest terms possible what to expect in the next coming (hopefully only) months.
The plan which was initially proposed last June, separated creditors into several categories depending upon whether or not you were a Earn and/or Custody user, and also depending on how much you had in each product:
The majority of people are going to fall in Class 4 (most likely many reading this article including myself), which is if you held less than $5k in crypto (valued at the time of bankruptcy). If you had more, (or if you’re wondering if you qualify for another class) Jduspra.com has a fantastic break down of each one.
How much can I expect to get back?
In a nutshell, different percentage of payouts are going to apply to each class, but in a nutshell I’ve read in several places that there’s a range of between 67–85%, with “Earn customers” getting potentially the highest proportion. Distributions will reportedly be given in in-kind assets for custody/withhold holders, otherwise in $ETH/$BTC, which you can opt into either if you contact Celsius directly:
Once again, this 67–85% will proportional to the amount that your crypto was worth at the time of bankruptcy, NOT at what it is valued at today. For me personally, the majority of my holdings were in $BTC, which was valued then at approximately $19,881 per $BTC.
Also to be clear, from my understanding no percentage can be given with certainty because there’s still different considerations to be made, mainly with ongoing/future litigation costs and possible funding for “NewCo.” This leads me to my next section…
What is NewCo?
“NewCo” is just a pronoun for a new company that hasn’t been named yet, but once approved, but for the purposes of Celsius creditors this will be a newly restructured company that focuses on mining and staking. If you were in classes 2, 5, 7, 8, 9 then you will be entitled to NewCo stock, or in other words you will be one of the creditors who will own part of NewCo. There’s a couple interesting details about NewCo which may give some optimism:
- As a stockholder/creditor, you’ll be to vote who goes on the board of directors, and furthermore, no one from former Celsius administrative staff will be transplanted over
- Even if you decide to sell off your stock as quickly as possible, you’ll still be entitled to litigation proceeds, where the litigation administrator has a fiduciary responsibility to give you funds back to try to make you whole. In other words, if Mashinky or any other insiders get sued down the road for their wrongdoings — you should get part of that nice payday.
When is this happening?
Once again, no “effective date” has been set, but there’s a great deal of speculation that people could see some returns early 2024.
Clawbacks are required prior to getting your crypto back
As part of the bankruptcy proceeding, depending on any withdrawals that you may have conducted after April 22nd, 2022 (90 days prior to the bankruptcy filing), you may be responsible for clawbacks, otherwise you may not be eligible for getting any funds back. To my understanding, if you were a normal retail investor with less than 100k in withdrawals, this should not apply to you. Regardless, the breakdown is as follows:
Withdrawals below $100k = No clawback
Withdrawals between $100–250k = Get a 27% haircut
Withdrawals of $250k+ = will be settled directly by the bankruptcy estate
Conclusion
I know there’s a lot of people out there that are unhappy with the plan, but I would imagine that there would be unhappy people no matter how they decided to cut the bankruptcy cake. I for one, am just wanting to get anything out at this point, so I’m glad that there seems to be some light at the end of the tunnel.
Ands always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. If you want to get access to all my draft links or get an idea about what’s next on my docket before I publish, find me on Friend.tech (and now New Bitcoin City), where if you’re a keyholder, I share all that information in my chatroom. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
