Celsius vs FTX Legal Showdown Continues with Appeal: $444M Dispute
The legal battle between Celsius Network and FTX is far from over, as Celsius recently filed an appeal challenging a ruling by Judge John Dorsey. This appeal takes aim at the dismissal of Celsius’ $444 million claim against FTX, which is part of the broader bankruptcy proceedings involving the failed exchange once run by Sam Bankman-Fried.
Celsius’ allegations revolve around claims that statements made by FTX executives regarding its financial stability hastened its downfall in 2022. The appeal seeks to overturn the December decision that threw out not only Celsius’ initial $2 billion claim but also its revised $444 million claim.
Initially, Celsius aimed for up to $2 billion in damages, citing harm caused by FTX’s actions. Eventually, they adjusted their claim to $444 million, focusing on what they call “preferential transfers” to prioritize creditor repayments.
FTX debtors pushed back against these claims, arguing that Celsius did not provide enough evidence to support their case and that the amended filing was tardy. Judge Dorsey sided with FTX, ruling that Celsius’ original claim, which had only one sentence about investigating preference claims, did not meet bankruptcy code standards.
The court further emphasized that Celsius did not seek permission to modify its claim or provide an explanation for the delay in filing. Due to these deficiencies, both the original and amended claims were dismissed.
As Celsius pursues its appeal, the company has committed to distributing $127 million to creditors from its litigation recovery account. Additionally, the firm’s former CEO, Alex Mashinsky, faces legal woes as well. In November 2024, a New York federal judge denied Mashinsky’s motion to dismiss fraud charges, including accusations of manipulating CEL, Celsius’ native token’s price.
Moving forward, Mashinsky is up against charges of wire fraud and market manipulation, carrying a potential sentence of up to 115 years in prison. The ongoing legal saga surrounding Celsius and FTX shines a light on the high stakes involved in resolving disputes in the aftermath of the tumultuous 2022 crypto industry collapse.
