Defunct Celsius Opens Withdrawal Access for Eligible Cryptocurrency Holders

Jimmy Aki
Last updated: | 2 min read
Source: AdobeStock

Bankrupt cryptocurrency lender Celsius has opened withdrawals for eligible custody customers starting November 29, according to a statement on X (formerly Twitter).

According to a court filing on November 28, “Celsius eligible custody users” are customers with “Class 6A General Custody Claims and/or Class 6B Withdrawable Custody Claim.” These users can withdraw 72.5% of their crypto holdings, excluding transaction fees, until February 28.

However, only specific custody assets are currently available for withdrawal, while all other cryptocurrencies remain inaccessible.

For a seamless process, Celsius urged users to withdraw their assets from the Celsius app and make personal records of any information they may find useful, emphasizing that the app will only be available for a limited time.

Despite these instructions, customers have encountered various issues during withdrawal attempts.

A user on X, ChazzonKe, stated that the crypto lender platform had 17 months to prepare and launch a withdrawal access portal, yet customers are now facing difficulties logging into their accounts via the app.

Celsius Newco Community also pointed out failed attempts to log in via Facebook.

Another Celsius customer expressed frustration on Reddit, reporting issues with the “send” page, which appeared blank and wouldn’t load.

However, Celsius foresaw recent customer complaints related to withdrawal and login issues. The company’s court filing acknowledged their anticipation of a high volume of withdrawal requests.

While committing to ensuring accurate and secure withdrawals, the platform noted that, due to the expected demand, not all withdrawals may be processed immediately upon request.

Celsius Bankruptcy and Formation of Mining NewCo

In July 2022, Celsius filed for Chapter 11 bankruptcy protection, closely followed by the suspension of withdrawals on its platform.

Subsequently, on July 13, 2023, the SEC filed a lawsuit against Celsius and its former CEO, Alex Mashinsky, alleging misconduct related to the Earn Interest Program. Mashinsky faces multiple charges, including securities fraud, with his trial scheduled to begin in September 2024.

The company’s collapse was attributed to Mashinsky’s trading decisions, mismanagement of $2 billion in assets, and ineffective systems for tracking these assets.

However, Mashinsky argued that the rapid growth of Celsius’ assets surpassed the company’s ability to make prudent investment decisions, leading to poorly judged asset deployments.

On November 20, Celsius and its debtors agreed to transition into a Bitcoin miner as part of its reconstruction process.

The company’s decision to transition to the Bitcoin mining industry marks an end to its previous strategies involving cryptocurrency lending staking.