The U.S bankruptcy court has ordered troubled crypto lending firm, Celsius to credit eligible account holders with airdrop of Flare tokens. According to judge Martin Glenn, the crypto lender must immediately commence plans to ensure the implementation of the order.
Worthy of note that Flare tokens is the native asset of Flare network, a layer 1 blockchain and oracle provider. In early January, the blockchain network agreed to distribute the tokens to anyone who held one or more XRP tokens during the December 2020 snapshot. As for Celsius, it secured a grant distribution agreement with Flare network before filing for bankruptcy last July. This thus necessitated the firm to wait for the approval of the bankruptcy court before airdropping the tokens to its eligible accounts. With the latest order by the Court, Celsius can now begin to airdrop the flare tokens.
Genesis of the crisis
Recall that the crypto lender plunged into financial crisis in the wake of the lingering bear market. This development thus compelled the firm to commence a voluntary chapter 11 proceeding. Celsius believed its bankruptcy filing tends to bring balance to its business. Earlier, the crypto lender halted withdrawals, deposits and transfers on its network.
The proceeding led to the constitution of the unsecured creditors committee as ordered by the court. This move became inevitable after reports that customers of the firm could not reach a level ground about certain proposals. At its first hearing, Binbits reported that Celsius published a debt of $5.5 billion with an assets worth $4.3 billion. Then, judge Glen granted some relief motions to the lender. One of the motions is allowing the firm to increase its mining devices to 112,000 by the second quarter of 2023. It is believed that the crypto lender would be able to repay customers with the proceeds of the mining activities.
Constitution of an independent examiner to probe Celsius
In September, the court approved the appointment of an independent examiner to probe the business of the firm. As mandated, the examiner probed the digital assets, tax payment procedures and current conditions of the lender’s mining business. The court also ordered Celsius to avail every document to the examiner to aid the investigation.
Notably, the proceeding took a new shape in November after Celsius received a directive from the court to set a deadline for customers to file their proof-of-claim. Occasioned by this development, the crypto lender slated January 3, 2023 as the ultimatum. Later, it postponed the deadline, reiterating its commitment to give customers with more time to make their filings.
Just a few weeks ago, the bankruptcy court further announced Celsius as the rightful owner of all assets deposited in its Earn Program. In a 45-page document, Glenn remarked that the terms of service of the firm indicated that it took ownership of customer deposits on the program. The program, as reported, enjoyed the patronage of about 600,000 users, with about $4.2 billion worth of crypto in it. The court described patronizers of the program as unsecured creditors. This thus means they enjoy lesser priority in the repayment consideration.