What happened to Celsius Network?

Celsius Network was a crypto lending platform that promised customers high rewards on deposited coins, then froze withdrawals during the 2022 market crash and went bankrupt. US authorities later found that its leaders had misled customers about how safe and profitable the business was. Its founder is now serving a federal prison sentence, and creditors have been repaid partly through a court-supervised plan.

What happened to Celsius?

Celsius took deposits of crypto and paid rewards by lending and investing those coins. On June 12, 2022, it halted withdrawals, and on July 13, 2022, it filed for bankruptcy. The Justice Department says about $4.7 billion in customer assets became inaccessible.

In July 2023 the Federal Trade Commission alleged that Celsius had told users they could always withdraw, claimed a $750 million insurance policy and overstated its reserves, while making risky bets and unsecured loans. Celsius agreed to a $4.7 billion judgment, suspended so its assets could go to customers, and a permanent ban on handling consumer assets. Why lenders' account terms mattered so much in court is covered in what happens if a crypto lender freezes withdrawals.

What happened to Alex Mashinsky?

Mashinsky pleaded guilty on December 3, 2024. On May 8, 2025, Judge John G. Koeltl sentenced him to 12 years in prison, three years of supervised release and a $50,000 fine, and ordered forfeiture of $48,393,446. Prosecutors said he misled customers about the company's safety and secretly helped prop up the price of Celsius's CEL token, sometimes using customer deposits, while selling his own CEL for about $48 million. Former chief revenue officer Roni Cohen-Pavon also pleaded guilty to manipulating CEL's price. The case is often compared with the collapse of FTX.

How does the Celsius bankruptcy distribution work?

Celsius's plan took effect on January 31, 2024, and creditors receive payments in rounds, in crypto or cash. Court filings list a second distribution around November 2024 and a third around August 2025. A fourth, funded mostly by litigation proceeds, of about $344.4 million, was set to begin in February 2026, which the debtors said would lift eligible creditors to about 72.1% cumulative recovery of their claims. They also said it would be the last paid in bitcoin, with later rounds expected in stablecoins and cash.

What should Celsius bankruptcy claim holders know?

Claims are managed through the Celsius Claims Portal. Creditors who failed to act by a March 31, 2025 deadline had their distributions forfeited, and about 12,000 creditors fell into that group. Those still owed payments are asked to complete identity checks, keep wallet and contact details up to date, and request cash if a crypto payment fails. Creditors who cannot receive BTC or ETH by the end of the second quarter of 2026 may only be offered stablecoins or cash.

The filings warn creditors to trust only emails from official domains and never to connect a crypto wallet to receive a payment. Scammers often target bankruptcy victims, as explained in what are crypto recovery scams.