• Celsius appeals court ruling that disallowed its $2 billion claim against FTX for alleged financial harm.

  • The legal dispute focuses on claims of defamation and preferential transfers filed by Celsius against FTX.

  • Judge dismissed Celsius' claims due to procedural issues as the crypto firms' legal battle escalates.

Celsius Network filed an appeal on December 31, challenging a ruling by Judge John Dorsey. The decision disallowed the bankrupt crypto lender's $2 billion claim against FTX for alleged disparagement. The appeal will be reviewed in District Court, continuing the contentious legal battle between the two collapsed crypto firms. 

https://twitter.com/VoiceofCrypto2/status/1874684789288300620 Allegations of Defamation  

The dispute started when the crypto lender alleged that FTX executives and their allies had made defamatory statements. According to Celsius, these comments harmed its reputation and its financial stability, putting it into bankruptcy in July 2022. Celsius claimed these statements caused a loss of customer confidence and triggered significant fund withdrawals.  

Celsius filed the original $2 billion claim in part because of unsubstantiated and disparaging statements that led to its downfall. However, FTX pushed back on the claim, pointing to a lack of evidence and that the claims did not meet bankruptcy claim standards.  

Revised Claim  

In December 2024, Celsius reduced its claim to $444 million. This revised filing shifted focus to preferential transfers. Celsius alleged that certain payments made to FTX before its bankruptcy unfairly prioritized specific creditors and demanded their recovery.  

Despite the changes, Judge Dorsey disallowed both the original and amended claims. The court noted procedural deficiencies in Celsius’ filings. It highlighted that Celsius did not seek court approval for the late amendment. The judge concluded that procedural rules could not be bypassed, regardless of the allegations’ merit.  

Broader Implications  

Celsius’ appeal reflects the growing legal challenges in the cryptocurrency industry. Bankruptcy proceedings have triggered fierce disputes as companies and creditors vie for asset recovery. Celsius’ efforts to claim damages from FTX are part of broader efforts to recover losses and strengthen its financial position.  

According to recent court filings, Celsius has already repaid $2.53 billion to around 250,000 creditors. The firm also plans to distribute an additional $127 million from its litigation recovery account.  

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