Celsius Network Users May Face Prolonged Waiting Time Over Repayment: Report

A new report has revealed that users of troubled crypto lending platform Celsius may have to wait a long time to access their funds frozen on the platform.

Recall that the firm had filed for voluntary Chapter 11 bankruptcy protection at a U.S. court earlier this week. The filing allows companies to set up reorganizational plans while still functional. However, it revealed a significant deficit of $1.2 billion belonging to its users, leaving customers worried over the state of their funds. 

Celsius Users May Face Prolonged Waiting Time

According to a Reuters Friday report, a group of legal experts specializing in restructuring plans has warned investors to brace for a long wait as they “await some clarity over the fate of their money.”

“With scant precedent for bankruptcies at large crypto companies, the prospect of multiple lawsuits against Celsius, as well as the high complexity of any restructuring, the Chapter 11 process is likely to be slow,” the lawyers told Reuters.

Reiterating the possibility of a prolonged settlement, Daniel Gwen from the New York Ropes & Gray legal company also said that the process could take years to finalize, adding that there is a high probability that multiple litigations would be involved. 

Little Precedent for Treatment of Crypto Companies

The attorneys said there is currently no clear roadmap for the treatment of customers against crypto lenders, and as such, it is unclear how the court would choose to deal with the matter. 

“It is, at best, unknown how the bankruptcy code and bankruptcy courts will be treating cryptocurrency companies,” James Van Horn, a partner at the Washington-based law firm Barnes & Thornburg. 

Additionally, the lawyers explained that the credit committees organized as part of the proceedings “will likely seek to shape any reorganization plan decided by Celsius,” and they can also make claims against the firm during the process. 

Meanwhile, the court document revealed that the company currently holds up to $4.3 billion in assets over the whopping $5.5 billion in liabilities. 

The firm was among the crypto companies that suffered a severe liquidity crisis due to the recent market slump, which led to suspending activities on the platform.

In the filing, Celsius CEO Alex Mashinsky admitted that the company had “made what, in hindsight, proved to be certain poor asset deployment decisions.”