Hey folks, if you‘re one of the unfortunate souls like me that got rugged by Celsius last year, you may have lost hope that you were ever going to see any of your funds returned, for I certainly had. However from the most recent court filings it looks like we may have finally gotten some resolution and a return of most of our funds, or at least for most of us.
For a quick recap, let’s cover some of the bad Celsius news we’ve gotten over the past several months:
June 13th, 2022: Celsius sends out a memo notifying customers that they’re freezing all accounts
July 13th, 2022: Celsius officially files for Chapter 11 bankruptcy
September 8th, 2022: Phone call gets leaked where Mashinksky pitches a rebrand called Celsius 2.0, “Kelvin” which will serve as a custody service…seriously…a custody service that we’re somehow supposed to trust after they completely mishandled our funds.
September 14th, 2022: Celsius ex-CEO’s wife, Krissy Mashinsky sells completely out-of-touch “Unbankrupt Yourself” t-shirts:
October 5th, 2022: A Statement of Financial Affairs gets released that pretty much doxxes every user and transaction histories, showing that Celsius executives took out a LOT of funds before the final shutdown. Perhaps the biggest names included former CEO’s Alex Mashinsky, who withdrew more than $10 million worth of tokens and former strategy chief Daniel Leon, who withdrew almost $7 million worth of tokens.
December 31st, 2022: Tax year ends, meaning that most people (at least in the US anyways) can’t claim their Celsius losses for tax-harvesting for 2022.
January 4th, 2023: Core Scientific shuts off 37,000 mining rigs tied to Celsius Mining, ending the hail-mary shot for making users whole through BTC mining.
January 5, 2023: Judge rules that people’s crypto that were stuck in Celsius’ earn account are not theirs, it’s Celsius’ thus solidifying the term, “if it’s not your keys, it’s not your crypto.”
February 15th, 2023: Good News…Possibly?
So after all this $h!tty news, as of February 15th, Celsius (or now being reorganized to “NewCo”) accepted a bid to be bought out by NovaWulf:
Assuming that everyone including the judge signs off on this deal, NovaWulf is providing $45–55 million in cash, and after about four months or so, earn customers should start seeing some of their money back.
How Much Money can you expect back?
- Convenience Class (If your balance in Celsius was less than $5,000) — you should get around 70% of your claim in “liquid” crypto (i.e., $BTC, $ETH, and/or $USDC). If your claim is greater than $1,000, you can opt-out and participate in the General Earn Creditor distribution.
- General Earn Creditors (If your balance in Celsius was more than $5,000) — you get equity in NewCo in the form of Equity Share Tokens (ESTs) and/or Management Share Tokens (MSTs), OR you can reduce your Celsius claim to $5,000 and be part of the Convenience Class
- If you were a holder of $CEL and got completely rekt — there has been some chatter that you might see a $0.20 recovery in token evaluation.
I know the solution isn’t perfect, but I think that this is better than nothing. I’m actually just surprised that we’re getting anything back. To be completely honest, I had written off getting any returns from Celsius at all, especially hearing over and over again how Celsius’ corpse was getting sucked dry by attorney fees.
That being said, I am fully aware that my take is a bit biased here because personally, I fit into the “Convenience Class.” and being part of the 85% of all Earn Account Creditors, I imagine that many of my “Convenient Class” peers feel the same. So I get it, this is complete bull$h!t if you put your kids’ college savings and/or life savings into Celsius and now you’re…a part owner of a company called “NewCo.”
When can I expect my returns to arrive?
According to the plan in the court documents, crypto distributions should take place sometime by the end of June 2023:
From what I’ve read, four months is actually a typical time limit set by most courts for bankruptcies, which actually gives me a lot of hope that we actually will in fact see some crypto back in our wallet towards the end of June.
Conclusion:
I hope that this comes as good news for those of you that desperately needed some of their money/crypto soon. For those of you that think this is a raw deal — I completely get it and I hope that you stay active in whatever NewCo equity structure there is in the future to ensure that at least something profitable can be made with your stolen funds.
If you’re still looking for some justice for Mashinsky, there might be some hope in this arena as well, for on January 5th the Ney York Attorney General’s office announced that they were suing him for fraud.
All this being said, it’s fully apparent that the story of the Celsius collapse isn’t over yet, and instead we are just moving on to a different chapter. The Celsius saga serves as a warning for those wanting to fly to close to the sun, and more importantly, it serves as an important reminder that if it’s not your keys, it’s not your crypto.
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. 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 or legal 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!
