The collapsed crypto lending platform Celsius has filed a notice of appeal against a court decision that disallowed its claims for damages against FTX as part of its ongoing bankruptcy proceedings. The appeal, filed on Dec. 31 by Celsius’ litigation administrator Mohsin Meghji, challenges Judge John T. Dorsey’s December ruling that rejected Celsius’ $444 million claim for damages related to preferential transfers.‍

Background of the Claims

Celsius originally sought $2 billion in damages from FTX, alleging that “disparaging statements” made by FTX officers about Celsius’ financial condition hastened its collapse. This claim was later revised to $444 million, focusing on alleged preferential transfers that Celsius argued gave undue advantage to certain creditors over others.

Judge Dorsey disallowed both claims, stating that Celsius’ original proofs of claim contained only a single sentence regarding the investigation of potential preference claims. The court found this insufficient to preserve such claims under bankruptcy rules.

Additionally, the court ruled that Celsius’ amended proofs of claim, filed in July 2024, were improper. The amendments were deemed unrelated to the original claims, filed after the bar date without permission, and likely to prejudice FTX’s ongoing reorganization efforts.‍

Celsius’ Arguments

In its appeal, Celsius countered that its original filings were sufficient to put FTX on notice of potential avoidance claims. The firm argued that these filings should be treated as protective proofs of claim, meeting the requirements of the Bankruptcy Code.

The amended claim sought to recover $444 million in transfers made to FTX entities, asserting that the funds should be returned to Celsius’ bankruptcy estate to be distributed among creditors.