There’s a new step forward for people who lost money when the cryptocurrency lending company Celsius crypto shut down. The company, which is going through bankruptcy, has started its third major round of payments. This time, it’s distributing $220.6 million in both cash and crypto to those who are eligible. This is a sign of real progress. So far, these payments have brought the total amount recovered for creditors to nearly 65% of what they lost.
The money for this latest round comes from several sources, including funds that were set aside from claims related to the company’s former CEO, Alex Mashinsky. While this is positive news, the process isn’t completely finished yet. People are still watching to see if everyone will be fully repaid and what will happen with remaining lawsuits. The company officially declared this third payout round on 20 August 2025.
Celsius Creditors See Fresh Payouts as Recovery Nears 85%
Celsius crypto creditors are finally seeing more of their money back. According to recent court filings, payouts include both crypto and cash options. Here’s how it works:
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Individuals can choose crypto via Coinbase or cash via PayPal/Venmo, but must pass KYC verification.
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Corporate creditors get U.S. dollars directly.
So far, the bankruptcy administrator Stretto has distributed $2.53 billion since January, covering 64.9% of total claims. The ultimate recovery goal is between 67% and 85%, which also includes equity in Ionic Digital, Celsius’ rebranded Bitcoin mining arm. On-chain data from Etherscan shows Celsius wallets on the move over 3,500 BTC and ETH transactions worth $150 million took place during the week of August 20 alone.
Around 251,000 eligible creditors were notified via email to update their details on the official claims portal. Authorities have also cautioned users to beware of phishing scams spreading on social media amid the payout process.
Celsius will begin a third distribution of $220.6 million to eligible creditors. More info here: https://t.co/A5VoaG7CCJ
— Celsius (@CelsiusNetwork) August 19, 2025
Inside Celsius Crypto Latest Funding Round for Creditor Payouts
The latest Celsius crypto payout round is being fuelled by some creative and unusual sources of funding. Here’s the breakdown,
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$17M comes from Alex Mashinsky’s disallowed claims, tied to his $48M forfeiture ordered at sentencing.
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$86.4M was freed up from reserves held for disputed claims.
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$46.3M came from other forfeited claims.
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On top of that, $63.2M has been set aside for administrative and legal costs, highlighting just how complex it is to unwind a company that once managed $25B in assets before collapsing in 2022 with a $1.2B hole.
This marks the third major distribution round, following $227M in January and $250M in April. While progress is steady, not everyone has had a smooth experience some international creditors, especially in Europe, are facing short delays due to regulatory red tape.
The Legal Challenges Aren’t Over Yet
While users are finally getting some of their money back, Celsius is still involved in several complex legal battles that could affect the final recovery amount. Here’s a simple breakdown:
1. Celsius is Going After Tether
Celsius got court permission to sue Tether for a massive $4 billion. They claim that Tether unfairly liquidated Bitcoin that was used as collateral during the company’s collapse.
2. “Clawback” Lawsuits
The company is also legally required to try to get money back from users who withdrew their funds right before the bankruptcy was declared. This is a standard process in bankruptcy, but it’s controversial. Some European users are challenging these lawsuits, arguing U.S. courts don’t have jurisdiction over them.
3. The Case Against the Former CEO
Former CEO Alex Mashinsky is appealing his conviction and prison sentence, which continues to draw out the final resolution of the case.
These legal fights show that large crypto bankruptcies are incredibly complex and can take many years to fully resolve. The courts are still figuring out how traditional laws apply to digital assets, which adds time and uncertainty.
Lessons from the Celsius Collapse
The Celsius recovery process offers a hopeful sign for those who lost funds, but it also exposes the deep-rooted vulnerabilities that existed across the crypto lending industry.
Many of these companies, including Celsius, FTX, and Voyager, prioritised rapid growth over strong risk management. They promised high returns without adequately protecting user funds, leading to catastrophic losses when market conditions shifted.
This pattern shows that the industry must evolve, placing a stronger emphasis on:
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Transparency: Clearly explaining how funds are being used and stored.
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Risk Controls: Implementing safeguards to prevent similar meltdowns.
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Regulatory Clarity: Establishing clearer rules to protect consumers without stifling innovation.
While repayments are a critical step toward justice, true accountability will come from reformed practices and regulations that prevent such collapses from happening again.
FAQs
1. What is the latest Celsius crypto payout? Celsius distributed $220.6 million in cash and crypto (BTC, ETH) to 251,000 creditors on August 20, 2025, marking its third major payout.
2. How much have Celsius creditors recovered? Total payouts reached $2.53 billion, covering 64.9% of claims, with projections of 67-85% recovery, including Ionic Digital equity.
3. What funds the recent distribution? The payout includes $17 million from ex-CEO Mashinsky’s forfeited claims, $86.4 million from disputed claim reserves, and $46.3 million from forfeited claims.
4. What legal battles does Celsius face? Celsius pursues a $4 billion claim against Tether for liquidated Bitcoin and faces clawback suits targeting pre-bankruptcy withdrawals, with EU creditors challenging jurisdiction.
5. How are payouts distributed? Crypto is sent via Coinbase, cash via PayPal/Venmo, and corporate creditors receive direct U.S. dollar payments; KYC verification is required for individuals.
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About the Author: John Brok
