The bankrupt crypto lender Celsius Network has filed an appeal challenging a court ruling that dismissed its $444 million claim against the defunct crypto exchange FTX.
The appeal, which is currently awaiting review in the District Court, comes as part of Celsius’ ongoing litigation efforts to recover funds from FTX.
Celsius’ Initial Claim
According to court documents, Celsius had originally filed a claim of up to $2 billion in damages from FTX. The claim alleged that FTX officials had made “unsubstantiated and disparaging statements” against Celsius, which undermined its reputation and accelerated its collapse in 2022.
However, before the bar date in July 2024, the company amended the claim to $444 million, stating that the new claim would focus on “preferential transfers” that allegedly gave some creditors an advantage over others.
In December, Judge John Dorsey, the magistrate in charge of the case, rejected both claims. He pointed out the procedural flaws in Celsius’ filings, stating that they lacked sufficient evidence to maintain the preference claims.
Judge Dorsey criticized Celsius’ amended filing, stating that it was improper since the company did not seek court approval. He also noted that the content of the amended claims was not remotely related to the original claims and could obstruct FTX’s restructuring plans.
On December 31, Celsius’ litigation administrator, Mohsin Meghji, officially filed a notice of appeal disputing Judge Dorsey’s ruling. In the filing, Celsius argued that its initial fillings met all the requirements of the Bankruptcy Code despite lacking a detailed explanation.
The company intends to continue pursuing the case to recover the disputed claim.
Celsius’ Repayment Efforts
Despite its legal woes, Celsius has made considerable progress to repay its creditors. In August 2024, the company began its repayment effort, distributing $2.5 billion in crypto and cash to more than 250,000 creditors in over 165 countries.
In a more recent court filing in November, Celsius announced plans to disburse an additional $127 million to creditors. The company pointed out that this second payout will be made from funds recovered through its litigation efforts.
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