Celsius Network Appeals Court Ruling in FTX Dispute

Bankrupt crypto lender Celsius Network has filed an appeal challenging a court decision that dismissed its $444 million claim against defunct crypto exchange FTX.

The appeal, lodged by Celsius Network litigation administrator Mohsin Meghji on December 31, disputes the court’s interpretation of the original claim filings.

Celsius initially sought $2 billion, alleging that “disparaging statements” from FTX officials destabilized its operations. However, the claim was later narrowed to focus on $444 million in “preferential transfers,” which allegedly favoured certain creditors.

In December, Judge John Dorsey ruled that Celsius’s initial filings failed to meet legal standards, citing procedural deficiencies and dismissing both the original and revised claims. The court noted Celsius did not formally amend its filings, a step that could have impacted FTX’s reorganization efforts. Celsius argues that its filings sufficiently informed FTX of potential legal actions and should have been protected under bankruptcy rules.

The complex legal battle unfolds as Celsius Network continues efforts to return funds to creditors. To date, the company has repaid $2.53 billion to approximately 251,000 creditors, covering 93% of eligible claims based on January 2023 valuations. An additional $127 million was allocated for distribution by late November, covering about 60% of claims.

Meanwhile, FTX creditor activist Sunil Kavuri emphasized the strategic shifts in Celsius’s claims and the challenges of navigating bankruptcy proceedings.

Celsius Network founder Alex Mashinsky recently pleaded guilty to commodities fraud and price manipulation related to the Celsius token. The most serious charge carries a potential 20-year prison sentence, with sentencing scheduled for April 2025.