84%. That’s the portion of Celsius creditors who will never recoup their full deposits, even after the restructuring plan is finalized—at least according to the latest statement of financial affairs filed with the Southern District of New York. When I saw that number, my jaw dropped. I’ve spent the last two weeks combing through PACER dockets, pinging lawyers on Signal, and re-reading Mashinsky’s own depositions. Somewhere between page 643 and 644 of the settlement motion, the former CEO quietly agreed to forfeit all claims to whatever crumbs come out of the bankruptcy estate. No token distribution, no equity in the new company, not even a symbolic one-cent payment. Zero.
Here’s What Actually Happened
Let’s timestamp this: on March 5, 2024, debtors’ counsel Kirkland & Ellis uploaded a stipulation titled “Agreement Resolving Insider Claims.” Buried in the eighth recital clause was a line that caught my eye:
“Alex Mashinsky hereby irrevocably withdraws and waives any and all proofs of claim against the Debtors.”That sentence didn’t just appear out of thin air. Back in November, Mashinsky had filed a personal claim for roughly $4.3 million in unpaid salary and token bonuses. Creditors called it tone-deaf; the U.S. Trustee called it ‘facially objectionable.’ The settlement wipes it away—for good.
Now here's the interesting part: most founders in Chapter 11 try to keep a sliver of upside. Think Sam Bankman-Fried’s (abandoned) attempt at a buy-back bid, or Voyager execs lobbying for retention bonuses. By contrast, Mashinsky is capitulating. My best guess? He’s bargaining for leniency in parallel civil litigation. Remember, the New York Attorney General sued him personally for fraud in January 2023, and the FTC still has an active investigation. Giving up his bankruptcy claim might make him look a tad more cooperative.
Why the Forfeiture Matters for Regular Depositors
At first glance, an extra four million dollars feels like a rounding error when the hole is north of $2 billion. But bankruptcy math is funny—every dollar not claimed by insiders flows pro rata to someone else. Let’s do a quick back-of-the-envelope calculation. According to the latest Disclosure Statement, Celsius has roughly 600,000 creditors. If Mashinsky’s forfeiture adds $4.3 million to the pot, that’s about $7.16 per creditor. Is that life-changing? No. Symbolically, though, it’s massive. It’s the difference between feeling like the captain goes down with the ship versus watching him sail away on a lifeboat made of gold.
I Had to Ask: Was He Even Entitled to Anything?
This sent me down a rabbit hole through precedent. Under In re S & A Properties, insider claims are subordinated if there’s evidence of misconduct. Multiple examiner reports already allege Mashinsky commingled customer assets and traded CEL token on margin—even while publicly shaming users for selling. My take? Even without the waiver, the court would have booted his claim under Section 510(c). Waiving it voluntarily just saves everyone the litigation costs.
Stepping Back to 2022—The Day the Music Stopped
I keep a personal log of key crypto contagion dates. June 13, 2022 is burned into my mind. Celsius paused withdrawals with BTC sitting around $25,400 and ETH at $1,340. My alerts lit up like a Christmas tree. Within 24 hours, over $1.7 billion fled from similar CeFi lenders—Nexo, BlockFi, you name it. Mashinsky tweeted, “Celsius is working nonstop.” Well, 572 days later, he’s still ‘working,’ but on legal briefs instead of yield products.
A Quick Detour: The CEL Token Rollercoaster
Because I know someone is going to ask: CEL’s price reaction to this news was… muted. We went from $0.247 to $0.259 in midday U.S. trading—roughly a 4.8% blip on thin volume (less than $600k on unregulated venues). If you’re thinking about speculating on CEL for some contrarian play, remember that the Plan Support Agreement already designates CEL as a “convenience class” claim capped at 25 cents. Translation: there’s a ceiling on valuation baked into the reorg, so don’t expect any GameStop-style squeeze.
How Negotiations Finally Got Him to Fold
Between September 2023 and January 2024, I interviewed three people who sat in mediation sessions. One described the dynamic as a ‘slow-motion hostage exchange.’ Celsius creditors, led by the Ad Hoc Group, threatened to sue Mashinsky personally for breach of fiduciary duty. Mashinsky’s camp raised the specter of delaying confirmation with endless appeals. Mediator Judge Wiles apparently told both sides, “You can litigate or you can distribute cash. Pick one.” Nine weeks later, the waiver landed in the docket. Funny how clarity emerges when judge’s patience runs thin.
So Where Does the Money Go Now?
The incremental cash gets folded into what’s called the ‘Recovery Pool’, slated for distribution in newco equity, BTC, and ETH. If timelines hold (huge ‘if’), creditors could see initial distributions by early June. The plan still hinges on securing a money-transmitter license in at least 48 U.S. states—an underrated bottleneck that even Voyager couldn’t clear. I’m cautiously optimistic but won’t celebrate until I see transaction hashes on-chain.
Potential Ripple Effects on Other Bankruptcies
I can’t help drawing parallels to the FTX estate. John J. Ray III has recovered about $7.3 billion so far and is clawing back executive bonuses. If Mashinsky’s capitulation becomes precedent, SBF’s inner circle—think Nishad Singh, Ryan Salame—may face similar pressure to waive claims. That could accelerate recoveries across the board, especially for the 9.7 million FTX creditors still hanging in limbo.
The Part That Still Bugs Me
Even with this concession, Celsius depositors will likely end up with 35–45 cents on the dollar, depending on asset mix and future BTC/ETH prices at distribution. That’s better than nothing, but far from the “unbank yourself” promise plastered on Celsius YouTube ads in 2021. I can’t shake the irony: a company that told everyone to escape TradFi collapsed harder than Lehman-era CDOs.
Looking Ahead—My Data-Driven Guess
Okay, crystal-ball time. Modeling a conservative 10% rise in BTC from today’s $63k to $69k by June—yes, I’m bullish heading into the next halving—the Recovery Pool could gain an extra $180 million in asset value. That bumps expected creditor recovery to the high end of guidance, maybe even nudging 50% for those who left mostly BTC on the platform. I’d peg the odds at 30%, given macro volatility and regulatory overhang, but it’s not impossible.
Will Mashinsky’s forfeiture move the broader needle on crypto governance? I think so. It sets a social—and potentially legal—precedent: founders who gamble with user funds can’t expect parachutes. That’s a narrative retail investors desperately need after the 2022 annus horribilis.
If You’re Still Holding a Celsius Claim, Here’s My Two Gwei
1. Keep an eye on docket #2903. That’s where distribution procedures will be finalized.
2. Verify your claim address—the estate will airdrop portions directly on-chain.
3. Consider partial claim sales only if you need liquidity; secondary markets are paying roughly 28–30 cents right now. You might leave upside on the table.
Final Thoughts Over a Cup of (Lukewarm) DeFi Tea
I’m struck by how fast sentiment can swing in crypto land. Two summers ago, Mashinsky was livestreaming weekly AMAs in a t-shirt that said “Banks are not your friends.” Today, he’s signing away millions to stay out of deeper trouble. Maybe that’s poetic justice; maybe it’s just another Tuesday in crypto. Either way, next time someone promises double-digit yield with ‘no risk,’ I’ll remember the 84% of Celsius creditors who learned the hard way.
