Celsius to appeal ruling dismissing $444 million lawsuit against FTX
Date: 2025-01-02 Author: Oliver Abernathy Categories: BUSINESS
Crypto lending platform Celsius has appealed a judge’s ruling dismissing its $444 million lawsuit against FTX in its ongoing bankruptcy proceedings. The company had been seeking to recover hundreds of millions of dollars from FTX, initially claiming $2 billion in damages for allegedly defamatory statements by FTX representatives that precipitated its downfall. Celsius later amended the lawsuit to focus on “preferential transfers” that gave preferential treatment to some creditors, claiming $444 million in damages.
Judge Dorsey dismissed both lawsuits in December, saying Celsius’s case was insufficient because the original filing only contained one sentence about possible claims under the preferential transfers, which was not enough to survive.
On December 31, the receiver for Celsius Network and its subsidiary debtors, Mohsin Mehji, filed a notice of appeal against the judge’s opinion and his decision.
FTX activist creditor Sunil Kavouri explained in a post on January 2 that Celsius filed a $2 billion defamation lawsuit before the filing deadline, then filed an amended lawsuit for $444 million over preferential transfers after that deadline.
In the original complaint, Celsius alleged that FTX representatives made “unsubstantiated and defamatory statements” about the company’s financial condition, and in the amended complaint, it claimed that $444 million in transfers made to FTX should be returned to the bankruptcy estate.
The court found that Celsius’ amended proof of claim, filed in July 2024, was flawed because the company failed to seek leave to amend, the amendments were insufficiently related to the original claims, and there was no explanation for the delay in filing the claim. Additionally, the amendments would have harmed FTX’s reorganization.
“Celsius asserts that the original proof of claim was sufficient to provide notice to the debtors of the potential claims and at least complies with the requirements of the Bankruptcy Code,” the filing said.
According to a court ruling in August, Celsius has recovered about $2.53 billion from about 250,000 creditors, or about 84% of its total debt. In late November, the company said it would soon send an additional $127 million from its collection account to creditors.
The Celsius token (CEL) rose 350% to $0.56 in September after paying out $2.5 billion, but it soon gave up most of those gains, falling below $0.20 and remaining 97.5% below its all-time high.
