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Celsius Completes $2 Billion Crypto Distribution to Creditors Post-Bankruptcy

Celsius distributes $2 billion in crypto to 172k creditors in flawless distribution

Celsius Network, the cryptocurrency lender that declared bankruptcy, has reached a significant milestone in its recovery process. The firm has successfully distributed approximately $2 billion worth of cryptocurrency to 172,000 creditors. This achievement was detailed in a court filing by Kirkland & Ellis, the legal team representing Celsius. 

Following its exit from bankruptcy, which was initiated in July 2022, Celsius has now ensured that most eligible creditors received their liquid crypto distributions. The distributions were facilitated through two major platforms: PayPal, serving holders in the United States, and Coinbase, managing overseas accounts. 

The legal update revealed: 

"As of the date hereof, a significant number of Holders have successfully collected their Liquid Cryptocurrency from PayPal/Venmo and Coinbase," 

Showcasing the efficiency of this process and marking a positive turn in Celsius's post-bankruptcy journey.

The role of PayPal and Coinbase in facilitating distributions

According to the details shared by Kirkland & Ellis, Celsius's legal representatives, the distribution strategy has been meticulously designed to cater to the diverse locations of its creditors. Those within the United States received their crypto through PayPal, while international creditors had their distributions managed by Coinbase. This strategic choice not only underscores the global reach of Celsius's creditor base but also the operational flexibility and reliability of PayPal and Coinbase as distribution agents.

The filing further specifies: 

"Nearly 75% of the BTC/ETH set to be distributed by PayPal/Venmo and through Coinbase has already been collected," 

This efficient execution is a testament to the robust systems of both PayPal and Coinbase, ensuring creditors could access their assets without security or operational hitches.

Legal and compliance challenges in the distribution process

The court filing highlights a critical concern: account holders who opposed the restructuring plan are left in a standstill, awaiting the resolution of their individual claims. This stipulation underscores the complexities of reconciling creditor interests within bankruptcy proceedings, illustrating the delicate balance Celsius must maintain between legal obligations and creditor expectations.

Moreover, the potential for compliance issues, particularly related to Anti-Money Laundering (AML) regulations, poses another layer of challenge. The filing states: 

"Distribution Agents have discretion to refuse making distributions to anyone they believe does not fulfill their compliance and other requirements,"

This indicates a rigorous vetting process by PayPal and Coinbase.

This measure, while essential for maintaining the integrity of the financial system, introduces a variable that could delay or complicate the distribution to certain creditors, highlighting the importance of stringent compliance frameworks in the cryptocurrency domain.

The broader implications of Celsius's restructuring and distribution efforts extend beyond immediate financial settlements. They signal to the crypto industry the critical role of regulatory compliance and the complexities involved in managing large-scale creditor distributions amidst bankruptcy.