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FRB Secures Full Allowance of Client’s Earn Claim in Celsius Network Bankruptcy
Background
When cryptocurrency lender Celsius Network LLC filed for Chapter 11 protection in the Southern District of New York, thousands of account holders faced the possibility of losing access to their digital assets. Among them was an FRB client whose Earn Account balance exceeded $111,000.
The client’s claim was initially disputed by the Litigation Administrator overseeing post-confirmation matters. The administrator argued that the claim was “inaccurately supported” and did not align with Celsius’s internal records, placing it among dozens of claims targeted in the Sixteenth Omnibus Objection to Certain Proofs of Claim.
FRB’s Approach
Falcon Rappaport & Berkman LLP was retained to advocate for the client’s rights and recovery. Led by Michele K. Jaspan, the FRB team performed a detailed analysis of blockchain transaction data, exchange records, and communications with Celsius and its custodians.
FRB’s investigation confirmed that the client had made two legitimate deposits totaling $108,000 USDC to Celsius addresses previously maintained by its custodian, BitGo, shortly before that relationship ended. Although the deposits were not credited to the client’s account at the time, Celsius later recovered those same funds from BitGo—establishing a direct link between the recovered assets and the client’s proof of claim.
FRB argued that the claim represented a valid Earn Account Claim entitled to treatment under Class 5 of Celsius’s confirmed Modified Joint Chapter 11 Plan, the same classification applicable to other similarly situated customers.
Negotiation and Resolution
Through sustained engagement with counsel for the Litigation Administrator, Kirkland & Ellis LLP (counsel to the post-effective-date debtors), and Pryor Cashman LLP (co-counsel to the Litigation Administrator), FRB achieved a consensual resolution.
The parties entered into a Joint Stipulation and Agreed Order providing that:
1. The prior order sustaining the objection to the client’s claim would be vacated; and
2. The client’s claim would be allowed in full as a Class 5 Earn Claim in the amount of $111,545.57.
The stipulation was approved by the Bankruptcy Court without the need for further litigation, ensuring full participation in distributions under the confirmed plan.
Result and Significance
FRB’s advocacy led to the complete reversal of a sustained objection, preserving over $111,000 in digital-asset value for its client. The firm’s meticulous work—combining technical blockchain forensics with sophisticated bankruptcy strategy—secured a prompt and favorable outcome in one of the most complex crypto-bankruptcy proceedings to date.
This result demonstrates FRB’s depth of experience in cryptocurrency insolvency and its commitment to achieving practical, high-impact results for clients navigating the intersection of digital assets and bankruptcy law.
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