In 2021, crypto lender Celsius acquired institutional self-custody platform GK8 for $115 million, but put the firm up for sale after it filed for Chapter 11 bankruptcy protection last year. 

Mike Novogratz’s crypto-focused investment firm Galaxy Digital won an auction to acquire GK8 in December, picking up the crypto custody firm for a 60% discount of $44 million.   

Earlier this week, Celsius’ debtors submitted a filing that proposed a $25 million cash settlement from the proceeds of the sale with its Series B preferred holders, of which $24 million will be allocated towards their legal expenses and $1 million would be distributed to the group.

“The Settlement Agreement was borne out of the mutual desire to avoid costly litigation and a contentious and lengthy confirmation process with a corresponding increase in professional fees,” wrote the Celsius debtors.

The group of ordinary Series B shareholders objected to the agreement, stating that the $24 million does not represent the actual expenses and fees of the preferred shareholder group. However, the debtors, creditor committee and preferred shareholders asked the court to overrule any objections and approve the proposed settlement to allow the rest of the bankruptcy proceedings to continue.

Last week, former Celisus CEO Alex Mashinsky was arrested and charged with conspiracy to commit a multi-billion dollar fraud and market manipulation scheme by the U.S. Department of Justice (DOJ). On the same day, the U.S. Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC) also filed lawsuits against Celsius and Mahshinsky.