Chief United States Bankruptcy Judge Martin Glenn has made a decisive ruling in the case involving former Celsius CEO Alex Mashinsky, denying him any claim to bankruptcy proceeds from the defunct crypto lender. This ruling, which was officially entered on June 16, 2025, marks a significant victory for Celsius creditors and paves the way for the distribution of reserved funds to legitimate claimants under the Chapter 11 reorganization plan.
The court order explicitly disallows all claims submitted by Mashinsky and his associated entities, including AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC. This decision effectively releases cash reserves, liquid cryptocurrency, and MiningCo shares for distribution to creditors who have already received over $2.5 billion in payouts throughout 2024.
The stipulation agreement reached on May 20, 2025, between Celsius litigation administrator Mohsin Meghji and Mashinsky solidifies the court’s decision and ensures that creditors will benefit from the release of funds previously held in reserve pending the resolution of Mashinsky’s claims.
Celsius Network, founded in 2017, initially garnered attention as a disruptive force in the banking industry, offering customers the opportunity to “unbank yourself” while earning attractive yields on their cryptocurrency deposits. However, the platform’s facade began to crumble in mid-2022 amid a broader crypto market downturn and mounting investor concerns.
Following a surge in customer withdrawal requests, Celsius froze all withdrawals on June 12, 2022, and subsequently filed for Chapter 11 bankruptcy protection, revealing a substantial $1.19 billion shortfall in its balance sheet. Federal prosecutors later uncovered evidence of Mashinsky’s deceptive practices, including misleading customers about Celsius’s financial health and orchestrating a Ponzi-like scheme to cover up the platform’s insolvency.
In a stark contrast to the ongoing challenges faced by FTX creditors, who are grappling with outdated valuation methodologies, Celsius creditors have enjoyed a more favorable recovery process. The platform has already distributed over $2.53 billion to approximately 251,000 creditors, with the most recent November 2024 payout adding another $127 million from the Litigation Recovery Account.
The success of Celsius’s creditor recovery efforts can be attributed to the efficient resolution of bankruptcy proceedings and the aggressive pursuit of asset recovery by the litigation administrator. In comparison, FTX continues to navigate a complex repayment plan plagued by fraudulent claims and outdated valuation methods.
As the legal proceedings unfold, it is evident that Mashinsky’s fall from grace – from a crypto visionary to a convicted fraudster – has significant implications for his financial future. While he serves a 12-year prison sentence, creditors are poised to benefit from the resolution of the Celsius bankruptcy case, underscoring the importance of transparency and accountability in the cryptocurrency industry.
The denial of Mashinsky’s bankruptcy claim represents a pivotal moment in the aftermath of Celsius Network’s collapse, signaling a win for creditors and a step towards justice in the evolving landscape of cryptocurrency regulation and accountability.