Defunct crypto lender Celsius Network has filed an appeal notice after Judge John Dorsey dismissed the firm’s claim on FTX damages worth around $444 million, according to FTX creditor activist.
Court documents showed crypto lending platform has filed a notice of appeal challenging Judge John Dorsey’s ruling, which denied Celsius‘ claims for FTX damages worth around $444 million. The trial is part of FTX’s ongoing bankruptcy proceedings which would seek to repay damages from the fallen crypto exchange led by Sam Bankman-Fried.
According to the appeal filed by Celsius Network’s litigation administrator, Mohsin Meghji, Celsius initially filed a claim for up to $2 billion in damages due to “unsubstantiated and disparaging statements” about the firm’ balance sheet and financial stability by FTX officers that the firm’s lawyers believe accelerated Celsius’ collapse in 2022.
However, before the bar date, Celsius decreased the claim amount to around $444 million, as the crypto lending firm stated it will focus on restoring “preferential transfers” that would prioritize repayments for certain creditors.
According to the document, FTX debtors denied Celsius’ claims because they deemed the original proof lodged by the firm were not enough to substantiate the claim. Additionally, the amendment from $2 billion to $444 million was thought to have been filed “too late and should be disallowed.”
Celsius argued that the original proof should be enough to meet the minimum requirements within the Bankruptcy Code and put debtors on notice.
Last December, Judge Dorsey dismissed both the amended $444 million claim and the initial $2 billion claim, stating Celsius’ original proof of claim — which only contained one sentence about investigating preference claims — was not enough to substantiate its claims for FTX damages.
Moreover, the court found that Celsius’ amended proofs filed in July were not legitimate due to the revised claim not being related to the original claims. Moreover, Celsius did not seek leave to amend nor provide an explanation regarding the filing delay.
In late November 2024, Celsius vowed to distribute $127 million to its credits from its litigation recovery account. Within that same month, a New York federal judge ruled against Celsius’ former CEO Alex Mashinsky’s bid to dismiss two fraud charges.
Mashinsky is accused of manipulating the price of Celsius’ native token, CEL. He faces two charges of wire fraud and market manipulation following the collapse of the crypto lending firm, which could lead to a maximum sentence of 115 years behind bars.
