Celsius reaches $25 million settlement over GK8 sale

Bankrupt crypto lender Celsius reached a settlement with Series B holders to distribute $25 million from the sale of crypto custodian GK8.

Under the settlement, $24 million will be allocated to cover legal expenses, and the remaining $1 million will be distributed among the Series B holders, according to a filing late Monday. CoinDesk first reported the news.

“The Settlement brings an end to nearly a year of highly contentious litigation and removes one of the largest obstacles to confirmation and emergence in exchange for a $25 million cash settlement from the proceeds of the GK8 sale and a mutual release of claims between the Initial Consenting Series B Preferred Holders and the Estate Parties,” the filing stated.

The settlement was agreed, despite some dispute over the proposed allocation of funds. The largest group of Series B shareholders is now urging the court to approve the settlement and move forward with the bankruptcy process.

Mike Novogratz’s Galaxy Digital agreed to purchase GK8 from Celsius in December for an undisclosed sum. GK8 was originally acquired by Celsius for $115 million in 2021.

Celsius filed for Chapter 11 bankruptcy protection in July 2022 after the collapse of Terra’s ecosystem left the company insolvent.

Last week, the Securities and Exchange Commission filed a lawsuit against Celsius and its ex-CEO Alex Mashinsky, accusing them of raising billions through fraudulent and unregistered sales of “crypto asset securities,” lying to investors about the company’s financial standing and manipulating the price of the Celsius native token.

Celsius is scheduled to appear in the United States Bankruptcy Court Southern District of New York at 10 a.m. ET today.