Celsius Network Appeals Dismissal of $2 Billion Defamation Claim Against FTX

Celsius Network filed a notice of appeal on December 31, challenging Judge John Dorsey's decision to dismiss a $2 billion defamation claim brought by a bankrupt crypto financier against defunct cryptocurrency exchange FTX. Submitted.

The appeal, currently scheduled for hearing in district court, marks the latest development in an ongoing legal standoff between the two beleaguered crypto companies.

Defamation claim

The appeal stems from Celsius' claims that defamatory statements by FTX executives, employees, and affiliates adversely affected the company's reputation and financial health, precipitating its July 2022 bankruptcy. There is.

Celsius claimed that FTX's public comments eroded trust in its services, led customers to withdraw their funds, and ultimately drove the platform into bankruptcy.

Celsius initially filed a $2 billion claim citing “baseless and derogatory statements” disseminated by FTX insiders, according to court filings. However, FTX resisted the claim, arguing that Celsius' claims lacked sufficient evidence and were outside the scope of bankruptcy claims.

Amended claims

In December, more than a year after the initial claim, Celsius amended its filing and reduced the claim to $444 million. This amended claim shifted the focus to priority transfers and asserted that certain payments made to FTX prior to bankruptcy should be recovered.

However, Judge Dorsey dismissed both the original and amended claims, citing procedural deficiencies.

The ruling emphasized that Celsius did not seek court approval for the late amendments and ultimately upheld FTX's objections. Mr. Dorsey's conclusion emphasized that an amended claim cannot circumvent procedural requirements, regardless of the substantive nature of the claim.

The case highlights the intense legal battles that are erupting across the crypto sector as companies embroiled in bankruptcy proceedings seek to recover assets and mitigate losses. Celsius' pursuit of claims against FTX reflects a broader pattern of creditors and counterparties vying for influence in ongoing bankruptcy negotiations.

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