Celsius Launches $220.6M Third Payout to Creditors in Recovery Push

Celsius Network has announced the commencement of its third repayment round, allocating $220.6 million to eligible creditors under its court-approved reorganization plan [1]. The distribution, which began on August 20, marks another phase in the company’s ongoing restructuring efforts following its collapse in 2022. This third round is expected to bring total recovery to 64.9% of outstanding creditor claims, with an estimated final recovery rate of between 67% and 85% [2].

The funds to be distributed are drawn from several internal reserves, including $63.2 million from lawsuits and administrative fees, $17 million from disallowed claims linked to former CEO Alexander Mashinsky, and $86.4 million from the disputed and contingent claims reserve. An additional $46.3 million and $7.7 million will come from forfeited and expunged claims, respectively [4].

Most of the third-round payments will be made in Bitcoin and Ethereum, with creditors required to complete Know-Your-Customer (KYC) verification through approved platforms such as Coinbase and PayPal. Corporate creditors, however, may receive payments in U.S. dollars rather than cryptocurrency [5].

In addition to cash and crypto disbursements, some creditors may also receive equity in Ionic Digital Inc., a newly formed Bitcoin mining company affiliated with Celsius [6]. The reorganization plan, which was approved by 98% of creditors in 2023, outlines a gradual and structured return of funds over multiple distribution rounds.

Celsius has advised creditors to update their information through the official claims portal to avoid potential delays. However, some claimants continue to face holdups due to unresolved legal and regulatory issues affecting their eligibility [7].

This third distribution follows two previous rounds: a $127 million payout in November 2024 and a $2.53 billion disbursement in early 2024, which was directed to over 251,000 creditors [3].

The company’s collapse in July 2022 was attributed to high-risk strategies, including leveraged trading and unsecured lending, alongside poor liquidity management. The broader crypto market downturn, compounded by the Terra-Luna and DeFi-related losses, forced Celsius to freeze withdrawals and file for Chapter 11 bankruptcy with a $1.2 billion deficit [8].

While the repayment process has moved beyond the halfway mark, many creditors are still awaiting full recovery of their funds. The protracted legal proceedings and regulatory complexities have slowed the distribution timeline. Nevertheless, the third payout represents a significant step forward in the restructuring process and may contribute to restoring confidence in similar crypto bankruptcy recoveries.

Source:

[1] Celsius to Begin 3rd Distribution of $220.6M to Eligible Creditors

https://coinpedia.org/news/celsius-to-begin-3rd-distribution-of-220-6-million-to-eligible-creditors/

[2] Celsius begins $220.6M third payout to creditors

[3] Celsius Creditors to Receive $220.6M in Third Repayment Round

https://www.cryptotimes.io/2025/08/20/celsius-creditors-to-receive-220-6m-in-third-repayment-round/

[4] Celsius Creditors to Receive $220.6M in Third Repayment ...

[5] Celsius begins $220.6M third payout to creditors

[6] Celsius Creditors to Receive $220.6M in Third Repayment Round

https://crypto.news/celsius-220m-distribution-third-payout-round-2025/

[7] Celsius begins $220.6M third payout to creditors

[8] Celsius Creditors to Receive $220.6M in Third Repayment Round

https://coinmarketcap.com/community/articles/68a5aa9b0685e37a9c236e66/