Celsius, the bankrupt crypto lender, is appealing a court decision that rejected its $444 million claim against the also-bankrupt FTX exchange. This is just the latest chapter in their ongoing legal battle.
The Dispute: Preferential Transfers and Bad PR
The core of the dispute is Celsius’s claim that FTX engaged in “preferential transfers” of funds, meaning they unfairly prioritized certain creditors, and made damaging public statements that worsened Celsius’s financial situation. Initially, Celsius sought a whopping $2 billion in damages, but this was later reduced to $444 million focused solely on the preferential transfers.
Why the Court Rejected Celsius’s Claim
Judge Dorsey tossed out Celsius’s claim, citing several procedural issues:
- Missed Deadline: Celsius filed its amended $444 million claim after the official deadline without court permission.
- Unrelated Claims: The amended claim was deemed too different from the original $2 billion claim.
- No Justification for Delay: Celsius didn’t adequately explain why they were so late in filing the amended claim.
- Harm to FTX’s Reorganization:
The late filing would disrupt FTX’s ongoing bankruptcy proceedings.
Celsius’s Defense
Celsius argues that their initial filing was enough to show their intent to pursue these claims and that their actions followed bankruptcy rules. They believe their filings were necessary to protect their rights.
What Happens Next?
Celsius has appealed the decision. The appeal will focus on whether their initial claim was sufficient and whether the court should have accepted the amended claim despite the procedural issues. The outcome will significantly impact both Celsius and FTX, and their creditors, as a substantial amount of money is on the line. The creditors are keeping a close eye on this, with some expressing skepticism about Celsius’s claims.
