Celsius Network filed a notice of appeal on Dec. 31, contesting Judge John Dorsey’s decision to disallow the bankrupt crypto lender’s $2 billion disparagement claim against defunct crypto exchange FTX.
This latest legal development between two crypto companies in a constant battle is the appeal that will be reviewed by the District Court.
All claims of disparagement
The appeal stems from Celsius’ assertions that defamatory statements made by FTX executives, employees, and affiliates negatively impacted the company’s reputation and financial health, allegedly accelerating its bankruptcy in July 2022.
Celsius contended that FTX’s public comments reduced confidence in its services, driving customers to withdraw funds and ultimately pushing the platform toward insolvency.
Celsius filed court papers citing a $2 Billion claim. “unsubstantiated and disparaging statements”FTX’s insiders have circulated this claim. However, FTX resisted the claim, arguing that Celsius’ assertions lacked sufficient evidence and fell outside the scope of bankruptcy claims.
Modified claim
Celsius filed a revised claim in December. More than a full year after its initial filing, it reduced the amount requested to $444,000,000. In its revised claim, the emphasis was shifted to preferential transfer. It claimed that certain payments paid to FTX before it filed for bankruptcy were to be clawed-back.
But Judge Dorsey dismissed both the amended and original claims, noting procedural inadequacies.
The ruling highlighted that Celsius failed to seek court approval for the late amendment, ultimately sustaining FTX’s objection. Dorsey’s conclusion emphasized that the amended claim could not bypass procedural requirements, regardless of the substantive nature of the allegations.
The case highlights how fierce the legal battles are in the crypto space as banks that have been embroiled into bankruptcy procedures try to recover assets or mitigate losses. Celsius’ pursuit of claims against FTX reflects a broader pattern of creditors and counterparties vying for leverage in ongoing bankruptcy negotiations.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
