Crypto Lender Celsius Wins Court Approval for Customer Withdrawals, Flare Token Airdrop

The U.S. bankruptcy court authorized eligible XRP holders to receive the Flare tokens due under a prior agreement.

AccessTimeIconJan 25, 2023 at 12:17 p.m. UTC
Updated May 9, 2023 at 4:06 a.m. UTC
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Bankrupt crypto lender Celsius Network secured approval to process certain customer withdrawals, several court orders filed on Tuesday show.

One, signed by Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York, authorizes Celsius to return funds transferred to the platform after the company filed for bankruptcy on July 14, 2022, subject to certain conditions. Another authorizes a Flare token airdrop to eligible owners of XRP tokens that are locked on the platform.

The orders follow a Tuesday court hearing in which the lender's lawyers proposed a plan to return funds to creditors with locked assets above a certain threshold by issuing a token. Other customers, who the attorneys said make up the majority of creditors, would receive a one-time distribution in liquid crypto. The plan has yet to receive approval from the U.S. Trustee's Office or other regulators.

Celsius filed for bankruptcy in New York last July, a month after it froze customers' withdrawals under the weight of a sliding cryptocurrency market.

With the new court orders, customers are allowed to withdraw funds transferred to the platform after the bankruptcy petition date in the form of crypto "net of any gas fees or transaction costs." The withdrawals will need to be approved by the appointed committee of creditors should the transfer amount exceed $40,000 (and the transferor received more than of $200,000 from Celsius during the three months leading up to the bankruptcy filing).

Another order, also signed by Glenn, greenlighted a Flare token airdrop to eligible creditors. Flare, which initially aimed to be a decentralized-finance (DeFi) application that used XRP tokens, earlier this month distributed tokens to XRP holders after a two-year wait. Those who held at least one XRP at the time of a snapshot in December 2020 – which recorded the contents of a blockchain ledger at the time – qualified for the airdrop and should receive one token for each XRP held.

The court order approves Flare tokens to be distributed to Celsius account holders who owned XRP at the time of the snapshot. Celsius itself qualifies to receive 150 million of the tokens, valued at around 4 cents on Wednesday.


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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.

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