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Celsius network files petition for relief in GK8 proceeds distribution amidst legal turmoil

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TL;DR

  • Celsius Network files a petition seeking relief in distributing proceeds from the GK8 sale.
  • A settlement agreement was reached among Series B investors, allocating $25 million, with $24 million for legal fees and $1 million for stockholders.
  • Acquisition of GK8 and subsequent bankruptcy present challenges for Celsius Network.

Celsius Network, a bankrupt cryptocurrency lending company, has approached the court for relief concerning the distribution of proceeds from the sale of the self-custody platform GK8. Significantly, on July 17th, the company’s unsecured creditors filed a document.

It announced that the Series B investors of the company had agreed to a settlement. This agreement would divide $25 million from the GK8 sale. The creditors’ committee, the debtors, and the original consenting Series B preferred investors agreed to this arrangement.

The proposal advocates for $24 million to be spent on legal fees. Consequently, the remaining $1 million would be divided among the stockholders. The debtors have agreed to this proposed allocation and continue to support it. According to the filing, this allocation provides the initial consenting Series B holders with reciprocal benefits.

Moreover, the settlement agreement led to a mutual desire to avoid protracted litigation and additional professional costs associated with a confirmation hearing. The report specifies that creditors stand to gain much from the settlement. Additionally, the debtors and all parties involved get invaluable peace of mind about the future. Hence, the court should reject the defendants’ objections and provide the sought remedy for the reasons stated in the motion.

In late 2021, Celsius paid $115 million to purchase the Israeli firm GK8 in the self-custody space. However, after Celsius went bankrupt in 2022, the struggling crypto lender had to sell GK8 as part of a restructuring plan. Galaxy Digital, an investment corporation by Mike Novogratz, outbid rivals to acquire GK8 in late 2022.

Legal concerns and penalties

Besides the GK8 sale, Celsius is dealing with several legal concerns in the middle of July. News emerged that the United States Securities and Exchange Commission had filed an action against Celsius. The U.S. Federal Trade Commission levied a $4.7 billion penalty on Celsius the same day. This news came with the arrest of former CEO Alex Mashinsky on July 13.

The ongoing legal concerns and the recent settlement agreement highlight a tumultuous period for the Celsius Network. The outcome of these proceedings will significantly impact the company’s and its stakeholders’ future.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Mutuma Maxwell

Maxwell especially enjoys penning pieces about blockchain and cryptocurrency. He started his venture into blogging in 2020, later focusing on the world of cryptocurrencies. His life's work is to introduce the concept of decentralization to people worldwide.

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