Celsius Network appeals $2B disparagement claim rejection against FTX

Celsius Community filed an attraction on December 31, difficult Decide John Dorsey’s determination to dismiss the bankrupt cryptocurrency lender’s $2 billion declare in opposition to defunct crypto change FTX.

The attraction, which is now below evaluate by the court docket, marks the newest growth within the ongoing authorized confrontation between the 2 embattled crypto corporations.

Accusations of contempt

The decision stems from Celsius’ claims that defamatory statements made by FTX executives, workers and associates negatively impacted the corporate’s popularity and monetary well being, probably precipitating its chapter submitting in July 2022.

Celsius claimed that FTX’s public feedback diminished confidence in its providers, inflicting clients to withdraw funds and in the end pushing the platform in the direction of insolvency.

In keeping with court docket paperwork, Celsius initially filed a $2 billion declare, citing “unsubstantiated and disparaging statements” unfold by FTX insiders. Nevertheless, FTX opposed the declare, arguing that Celsius’ claims lacked ample proof and have been outdoors the scope of chapter claims.

Amended declare

In December, greater than a yr after the unique declare, Celsius amended its software, decreasing the quantity requested to $444 million. This revised declare shifted the main focus to preferential transfers, alleging that sure funds made to FTX ought to be recovered previous to chapter.

Nevertheless, Decide Dorsey dismissed each the unique and amended claims, citing procedural deficiencies.

The ruling highlighted Celsius’ failure to hunt court docket approval for the late modification, which in the end supported FTX’s objection. Dorsey’s conclusion emphasised that the amended declare couldn’t circumvent procedural necessities, whatever the substantive nature of the allegations.

The case highlights the fierce authorized battle erupting within the crypto sector as corporations embroiled in chapter proceedings try and get better belongings and restrict losses. Celsius’ pursuit of claims in opposition to FTX displays a broader sample of collectors and counterparties vying for affect in ongoing chapter negotiations.