Former Celsius CEO Alex Mashinsky has agreed not to claim any assets from the Celsius bankruptcy proceeds.
In a motion filed on Monday, the United States Bankruptcy Court for the Southern District of New York stated that an agreement has been reached between Celsius debtors and Alex Mashinsky, AM Ventures Holdings Inc., Koala1 LLC and Koala3 LLC that prohibits the distribution of proceeds from Celsius’ bankruptcy to the latter parties.
Source: Stretto
The agreement stipulates that Celsius debtors can distribute funds tied up due to claims made by Mashinsky and the three related entities.
Further, the court retained jurisdiction over all matters relating to this case; however, the court will not supersede the ongoing criminal case.
“The Court shall have exclusive jurisdiction to resolve any and all disputes related to this Stipulation and Order,” the motion read.
Alex Mashinsky’s prison sentence
In May, Mashinsky was sentenced to 12 years in prison after a US judge found the former Celsius CEO guilty of committing fraud.
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Mashinsky’s legal team highlighted his military service and pleading guilty in December as grounds for a more lenient sentence.
Prior to his sentencing, the US Department of Justice had sought a 20-year prison sentence for Mashinsky, though his lawyers cried foul, saying that it would be a “death-in-prison sentence.”
Celsius creditors get their money back
Celsius creditors have collectively claimed more than $1 billion in assets so far this year.
In August 2024, Celsius paid out more than $2.5 billion to over 251,000 creditors. However, as many as 121,000 creditors did not stake their claims due to the amounts being less than $1,000, with the vast majority losing less than $100.
In November 2024, Celsius stated that it would pay out $127 million from its “Litigation Recovery Account” to creditors, which included retail borrowers, retail depositors and users of its Earn program.
In July 2023, Celsius reached two settlements to exit Chapter 11 bankruptcy proceedings, which were initiated in July 2022.
Chapter 11 bankruptcy is a legal process in the US that allows businesses to restructure without having to face immediate repercussions from creditors.
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