Understanding the Celsius Settlement Matrix: A Guide for Defendants
By: Moish E. Peltz, Esq. and Michele K. Jaspan, Esq.
The Celsius Network bankruptcy case has been a significant event in the cryptocurrency world, leading to numerous legal battles and adversary proceedings. One of the critical aspects of this case is the recently proposed settlement framework designed to resolve preference liability for defendants. This blog post aims to provide a comprehensive understanding of the Celsius Settlement Matrix, which is crucial for defendants who wish to settle their cases in May 2025 and avoid expensive and protracted mandatory mediation or litigation.
What is the Celsius Settlement Matrix?
The Celsius Settlement Matrix is a structured framework, prepared by the Celsius Litigation Administrator, that quantifies the settlement percentage offered to most of the defendants involved in the Celsius bankruptcy case. This matrix is designed to offer a resolution for defendants by calculating a custom settlement percentage based on specific criteria related to their Withdrawal Preference Exposure (WPE).
How is the Settlement Percentage Calculated?
The settlement percentage is calculated based on an aggregate score derived from four distinct categories. Each category is assigned a sub-score, and the sum of these sub-scores determines the aggregate score. The categories are as follows:
- Total Amount of Withdrawal Preference Exposure (WPE): This is based on the total value of cryptocurrency withdrawn from the Celsius platform during the 90 days leading up to the bankruptcy filing.
- WPE Multiplier: This ratio compares the current potential preference liability to the total amount of WPE.
- Post Terra Luna Withdrawals: This considers the timing of the preferential transfers, specifically the percentage of WPE incurred on or after May 11, 2022.
- Assets on Platform (% of WPE): This evaluates the current value of assets still on the Celsius platform as a percentage of the total WPE.
Settlement Bands and Percentages
The aggregate score falls into one of five bands, each with an assigned settlement percentage. The bands and their corresponding settlement percentages are as follows:
- Band 1: Score 4-9, Settlement Percentage 8.25%
- Band 2: Score 10-17, Settlement Percentage 11.25%
- Band 3: Score 18-25, Settlement Percentage 12.75%
- Band 4: Score 26-33, Settlement Percentage 14.25%
- Band 5: Score 34-43, Settlement Percentage 16.00%
Example Calculation
To illustrate how the settlement framework works, consider a US defendant who had 8 ETH, 100,000 USDC, and 10 BTC in a Celsius Earn account on April 13, 2022. During the preference period (April 14, 2022 - July 13, 2022), the defendant withdrew all of her cryptocurrency, resulting in a total WPE of $392,087. Based on the matrix criteria, the defendant's aggregate score is calculated as follows:
- Total WPE: $392,087, Sub-score 3
- WPE Multiplier:7x, Sub-score 10
- Post Terra Luna Withdrawals:8%, Sub-score 8
- Assets on Platform: 0%, Sub-score 1
The total aggregate score is 22, placing the defendant in Band 3 with a settlement percentage of 12.75%, resulting in a settlement amount of $49,991.
International Defendants and Discounts
Defendants residing outside the United States may be entitled to a discount on their settlement amount based on their country of residence. For example, a defendant living in Switzerland would receive a 20% discount on the settlement amount. The specific discount percentages for various countries are detailed in the settlement framework.
Deadline and Implications
The deadline for eligible defendants to accept their settlement offer is typically May 30, 2025, but should be confirmed as the date may vary depending on when an offer was sent. Defendants who settle and pay in full per the terms of their settlement agreement will have the lawsuit against them dismissed. Those who do not settle by the deadline will have to participate in the litigation process, including mandatory mediation likely to begin in the second half of 2025.
Large Group Discounts
Certain large defense groups may be eligible for further discounts off of the offered matrix percentage. Our law firm is collaborating with one of the large defense groups to enable our clients access to the group discount. Please contact us to learn more and to determine if you are eligible.
Conclusion
The Celsius Settlement Matrix provides a structured approach for defendants to resolve their preference liability in the Celsius bankruptcy case, and avoid the cost of litigation. By understanding the calculation criteria and settlement bands, defendants can make informed decisions about their settlement offers. If you have been named in a Celsius adversary proceeding, our experienced team at Falcon Rappaport & Berkman LLP is here to guide you through this challenging process and help you achieve the best possible outcome.
DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.