Celsius Challenges Court Ruling on $444 Millon FTX Claim

Celsius Network has appealed Judge John Dorsey’s dismissal of its $444 million damages claim against FTX. The claim is part of ongoing bankruptcy proceedings tied to FTX’s collapse under Sam Bankman-Fried.

Initially seeking $2 billion, Celsius reduced the claim to focus on “preferential transfers” for creditor payments. The court dismissed both claims, citing insufficient evidence and procedural issues.

In November 2024, Celsius pledged $127 million to creditors from its litigation recovery fund, while its former CEO, Alex Mashinsky, faced fraud charges, risking up to 115 years in prison. Celsius’ appeal underscores the legal complexities following the collapse of major crypto firms.

FTX debtors rejected Celsius’ claims, arguing that the original proof of claim lacked sufficient evidence and that the amended $444 million claim was filed too late.

Judge Dorsey ruled that Celsius’ original one-sentence claim regarding preference investigations failed to meet the standards of the Bankruptcy Code. He also dismissed the amended claim, citing its lack of relation to the original filing and the absence of a formal request to amend or an explanation for the delay.

In parallel developments, Celsius pledged to distribute $127 million to creditors from its litigation recovery account in November 2024. That same month, a New York federal judge denied former Celsius CEO Alex Mashinsky’s motion to dismiss two fraud charges. Mashinsky faces accusations of wire fraud and market manipulation related to Celsius’ native token, CEL. If convicted, he could face up to 115 years in prison.

Celsius’ appeal adds another layer to the protracted legal battles surrounding the fallout of major crypto firms as stakeholders seek clarity and compensation in the wake of industry-wide collapses.

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