Amid ongoing bankruptcy proceedings, two creditors of the cryptocurrency lending platform Celsius are urgently seeking additional payments, alleging that they were shortchanged compared to other account holders. This motion, filed on June 3, points to widespread dissatisfaction among corporate creditors and highlights significant financial discrepancies.

The creditors, a married couple managing Celsius corporate accounts, claim they received payments 35% lower than those of non-corporate account holders. They have requested a second distribution to address this disparity, which has raised broader concerns about the fairness and efficiency of the bankruptcy settlement process.

According to the filing, the couple represents four companies—BFaller RD, BFaller ROTH RD, SFaller TRD RD, and SFaller RD, collectively known as the “Faller Creditors.” These companies, which are Individual Retirement Accounts (IRAs) owned by Sheri Anne Faller and Bernard Jacob Faller, held over $1 million in cryptocurrency on Celsius's platform before the bankruptcy. Under the terms of the bankruptcy plan, their claim was reduced to $634,337.93 in Bitcoin and Ether.

The Faller Creditors were initially informed they would receive their payout in cryptocurrency by January 16. However, the payments were delayed, and on January 19, they were told that because their accounts did not rank among the top 100 corporate accounts by asset value, they would instead receive cash. This conversion led to further delays, and they finally received $414,733 on February 22, followed by an additional $219,602 on April 22, totaling $634,335.

The couple contends that the cash payments fell significantly short of the value of the BTC and ETH they were owed, as calculated on the payout dates. By their estimates, they should have received $973,955 based on the cryptocurrency prices at the time. As a result, they are demanding an additional $338,611, plus $11,984 in interest for the delayed payments, totaling $350,596.

This motion underscores broader frustrations among Celsius's corporate creditors, who have accused the platform of mishandling the distribution process. Many have reported receiving cash instead of cryptocurrency and experiencing significant delays. Corporate creditors argue that Celsius prioritized certain accounts and failed to make adequate provisions for a fair and timely distribution of assets.

The Faller Creditors' motion also challenges Celsius Estate's choice of distribution agents, criticizing the use of Coinbase and PayPal when other platforms like Kraken and Bitgo could have been employed to handle broader distributions. They argue that the selection was arbitrary and did not constitute "commercially reasonable efforts" as required by the bankruptcy plan.

The Celsius estate has previously defended its actions, stating that it sold users’ cryptocurrency on January 16 as required by the bankruptcy plan and that it faced significant compliance and onboarding challenges for corporate accounts. The estate maintained that it made reasonable efforts to secure accounts for corporate creditors and to pay them in cash when cryptocurrency payments were not feasible.

The motion is scheduled to be heard on June 27, during an omnibus hearing where these and other claims will be considered. This hearing is crucial as it addresses not only the Faller Creditors’ grievances but also sets a precedent for how corporate creditor claims are handled in cryptocurrency bankruptcies.

Celsius, founded in 2017, ceased processing withdrawals in June 2022, trapping an estimated $2.8 billion of customers' cryptocurrency on its platform. The company filed for bankruptcy in July 2022 and has since paid out more than $2 billion in creditor claims. Most creditors received their payments without significant issues, but corporate accounts have faced more complex challenges, leading to the current legal disputes.

The outcome of the Faller Creditors' motion could have significant implications for how creditor rights are managed in the evolving landscape of cryptocurrency bankruptcy proceedings. It highlights the need for transparent and equitable processes to ensure fair treatment of all stakeholders involved.