Withdrawal before bankruptcy may lead to lawsuits Celsius has started using legal means to recover funds from users

According to Cryptoslate, bankrupt cryptocurrency lending company Celsius Network has begun taking legal action against account holders who made large withdrawals (over $100,000) within 90 days prior to the company’s bankruptcy filing and refused to reach a settlement with the company. According to a previous report by Zombit, the bankruptcy trustee for Celsius had been reaching out to platform customers who withdrew over $100,000 from the platform before its closure, with the aim of recovering potential outflows to repay customers who did not withdraw from the platform in a timely manner. According to the trustee’s statement at the time, this clawback is expected to impact 2% of Celsius’ customers who collectively withdrew 40% of the company’s assets within 90 days prior to filing for Chapter 11 bankruptcy. Reportedly, Celsius has reached settlements with over 1500 account holders regarding over $500 million of priority debt issues and has successfully recovered nearly $100 million, providing significant relief for Celsius’ creditors. Celsius’ litigation administrator, Mohsin Meghji, explained that during the period from April 14 to July 13, 2022, a significant amount of withdrawals led to a severe imbalance in the company’s finances, ultimately leading to the bankruptcy filing.