- Celsius will be pursuing retail clawbacks from their customers who withdrew their assets before the bankruptcy date.
- Clawbacks could cause severe damage to centralized exchanges, according to a crypto influencer.
- Seven members of Celsius’s new board of directors have been revealed.
Celsius Network, the bankrupt crypto lending platform, would be pursuing retail clawbacks against their customers who withdrew from the platform before the bankruptcy date. Crypto influencer Aaron Bennet shared the news on X.
Clawbacks are used to recover funds or assets from retail customers who withdrew their money or assets from a company before it declared bankruptcy. The influencer stated that if this happened, centralized exchanges, with Coinbase being a notable example, could be severely damaged.
Bennet shared frustration with the news and questioned the reason for holding any crypto if there’s a chance it could be retrieved forcefully. He said, “Why would anyone keep ANY crypto if it can all be forced to be sent back due to bankruptcy?”
In the tweet, Bennet shared a source that detailed the potential customer preference claims prior to the petition date. It said:
Subsequent deposits made by the customer are available to offset previous withdrawals. To the extent deposits exceed the value of earlier withdrawals, the preference balance goes to zero. (i.e., the excess is not applied against subsequent withdrawals), and the analysis begins again until the Petition Date to determine whether preference exposure remains.
Recently, crypto consortium Fahrenheit, the company that acquired Celsius, proposed a new board of directors that included Michael Arrington, Asher Genoot, Max Holmes, and new CEO Steve Kokinos.
Kokinos is the former CEO of Algorand, a layer-1 staking-based blockchain. According to the court filing, the proposed CEO has raised over $1.5 billion for the companies he founded and/or led as CEO.
Arrington is the founder of Arrington Capital, a digital asset management firm primarily focused on blockchain-based capital markets. Genoot is currently the President of U.S. Bitcoin Corp., an industrial-scale operator of Bitcoin mining sites. Meanwhile, Holmes is the chief investment officer at Haven Asset Management, an S.E.C. registered investment advisor.
Seven new directors have been proposed by Fahrenheit and the Official Committee of Unsecured Creditors of Celsius. Fahrenheit selected two members, the creditors selected three members, and both of them chose the remaining two members with mutual agreement.