According to a Twitter thread published on March 29 by company CEO Ray Youssef, Paxful will reimburse Earn program participants affected by the Celsius Network’s collapse in 2022.
“I have personally taken action and will be refunding all affected Paxful users,” said Youssef, explaining that affected users’ funds will be available in the platform’s wallet within the next few days.
On July 14, Celsius filed for Chapter 11 bankruptcy in the United States, locking up the assets of thousands of depositors on its crypto lending platform.
At the time, neither the company nor its CEO, Alex Mashinsky, commented publicly on whether depositors could expect a return of any portion of their funds.
According to the bankruptcy filing, user deposits constituted the majority of Celsius’ $4.72 billion in liabilities. Paxful has not disclosed how much it is returning to customers at this time. Youssef commented on the decision:
“The [Celsius] collapse hurt countless users and damaged trust in our industry. Paxful, like many others, were paralyzed to act as we could not retrieve funds held by Celsius. Another hit came when the courts ruled that Celsius Earn Account belonged to Celsius’ bankruptcy estate, not to its users. This didn’t sit right with me then, and it still doesn’t sit right with me today.”
During a bankruptcy hearing on January 4, Judge Martin Glenn ruled that Celsius, not its depositors, owned the funds in the interest-bearing Earn program. Yousef commented on the decision, stating that Celsius’s bankruptcy proceedings are still ongoing.
A settlement agreement between the committee of unsecured creditors and a group of account holders was recently approved, allowing account holders to recover 72.5% of their cryptocurrency holdings.
In February, the defunct platform announced that NovaWulf Digital Management would act as a sponsor for its restructuring plan, claiming that more than 85 percent of Celsius customers would be able to recover approximately 70 percent of their crypto assets.
