Celsius to spend $25 million from GK8 sale on legal expenses
- Celsius acquired GK8 for $115 million in 2021 but was forced to sell it as part of its restructuring process.
- The shareholders have proposed allocating $24 million from the sale proceeds for legal expenses and $1 million to the holders.
Bankrupt cryptocurrency lender Celsius will spend $25 million from the sale of GK8 on legal expenses and holders.
Celsius, its creditors, and its Series B holders submitted a filing on 17 July, stating that Series B holders have agreed to a settlement on how $25 million from the proceeds of Celsius’ sale of GK8 would be distributed. Debtors, the creditors’ committee, and the initial consenting Series B preferred holders struck an agreement. Celsius has requested the court to provide relief in the motion.
The shareholders have proposed allocating $24 million from the sale proceeds for legal expenses and the rest of the $1 million to the holders. The settlement agreement was based on the “mutual desire” of the parties to avoid costly litigation and a protracted confirmation process, which would have resulted in increasing professional fees.
According to the report, creditors stand to benefit greatly from the deal. Furthermore, the debtors and all parties involved gain invaluable peace of mind regarding the future. Hence, the court should overrule the defendants’ objections and grant the remedy requested for the reasons mentioned in the motion.
Celsius acquired the Israeli self-custody venture GK8 for $115 million in 2021. Following the collapse of Celsius in 2022, the crypto lender was shortly forced to sell GK8 as part of its restructuring process.
The acquisition was viewed as a strategic move to strengthen its position in the crypto lending sector. However, the company had to make the tough decision to divest GK8 as part of its restructuring plan in 2022.
Legal challenges on multiple fronts
Celsius is facing a slew of legal challenges in the U.S. over the past few days. The Securities and Exchange Commission (SEC) sued the crypto lender. The Commodity Futures Trading Commission (CFTC) also sued the firm. The Federal Trade Commission (FTC) levied a $4.7 billion fine against Celsius during the same period.
Mashinsky has pled not guilty on charges of misleading customers and inflating the Celsius [CEL] token.
Celsius and its creditors are scheduled to appear in court in New York on 18 July.