Former Celsius CEO Alex Mashinsky has agreed not to make any claims against the assets from Celsius's bankruptcy liquidation.
In a motion submitted on Monday, the U.S. Bankruptcy Court for the Southern District of New York noted that an agreement has been reached between Celsius's debtors and Alex Mashinsky, AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC, prohibiting the distribution of Celsius's bankruptcy liquidation proceeds to the latter.
The agreement stipulates that Celsius's debtors may distribute funds that were frozen due to claims made by Mashinsky and the three related entities.
Furthermore, the court retains jurisdiction over all related matters in this case; however, the court will not replace the ongoing criminal proceedings.
The motion states: "The court should have exclusive jurisdiction to resolve any and all disputes related to this agreement and order."
In May of this year, a U.S. judge found the former Celsius CEO guilty of fraud, resulting in Mashinsky being sentenced to 12 years in prison.
Mashinsky's legal team emphasized his military service and the fact that he pleaded guilty in December as grounds for requesting a more lenient sentence.
Prior to the sentencing, the U.S. Department of Justice had sought a 20-year prison sentence for Mashinsky, to which his lawyers strongly opposed, stating it would be a "sentence to die in prison."
So far this year, Celsius creditors have collectively reclaimed over $1 billion in assets.
In August 2024, Celsius paid over $2.5 billion to more than 251,000 creditors. However, up to 121,000 creditors did not file claims due to amounts being less than $1,000, with the vast majority of losses being under $100.
In November 2024, Celsius announced it would pay $127 million to creditors from its "litigation recovery account," with beneficiaries including retail borrowers, retail depositors, and users of the Earn program.
In July 2023, Celsius reached two settlement agreements to exit Chapter 11 bankruptcy proceedings, which began in July 2022.
Chapter 11 bankruptcy is a legal process in the U.S. that allows businesses to reorganize without immediately facing creditor claims.
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