Celsius, the popular energy drink, faced a class-action lawsuit alleging its “no preservatives” claim was misleading due to the presence of citric acid. This guide provides a comprehensive overview of the lawsuit, settlement details, and other legal battles involving Celsius.
What Was the Citric Acid Controversy?
Celsius marketed its drinks as containing “no preservatives.” However, the drinks contained citric acid, which, while primarily a flavor enhancer, can also act as a preservative. This dual functionality led to the lawsuit, with consumers alleging Celsius misled them.
Who Was Eligible for Compensation?
Individuals who purchased specific Celsius drinks for personal consumption (not resale) in the U.S. between January 1, 2015, and November 23, 2022, were likely eligible. This included Celsius Original, Heat, BCAA+Energy, Stevia, On-The-Go, and Flo Fusion powders.
What Was the Payout?
With proof of purchase, claimants could have received $1 per can or $5 per 14-pack of powder, up to $250. Without receipts, the potential payout was up to $20 per household. The deadline to file a claim was February 13, 2023.
Other Legal Battles Involving Celsius
This “no preservatives” lawsuit was not Celsius’s only legal challenge. Separate litigation involved the ingredients of their sparkling water and a high-profile breach of contract case with rapper Flo Rida, resulting in an $82.6 million judgment against Celsius. These were distinct from the citric acid settlement.
What Did Celsius Say?
Celsius maintained they acted properly and settled to avoid further legal costs, a common practice in class-action suits. Settling does not imply guilt but may offer some validation to those who felt misled.
Key Takeaways from the Citric Acid Lawsuit
| Detail | Description |
|---|---|
| Lawsuit Basis | Alleged misleading “no preservatives” advertising despite the presence of citric acid. |
| Settlement Total | $7.8 million |
| Eligible Products | Various Celsius drinks (see above) purchased for personal use in the U.S. |
| Eligibility Period | January 1, 2015, to November 23, 2022 |
| Claim Deadline | February 13, 2023 |
Celsius Bankruptcy and Cryptocurrency: A Separate Legal Saga
Beyond the “no preservatives” case, Celsius faced separate legal action related to its cryptocurrency operations. Accusations centered on misleading claims about financial stability, risky investments, and use of customer funds to cover operational costs.
Key legal players involved included:
- New York Attorney General: Alleged fraud against investors, including New York residents.
- Federal Trade Commission (FTC): Alleged misleading consumers about the safety and accessibility of their crypto holdings.
- Securities and Exchange Commission (SEC): Filed charges against Celsius and its former CEO, Alex Mashinsky, related to securities violations.
The consequences were substantial, with the FTC securing a $4.7 billion judgment (currently on hold due to bankruptcy proceedings) and barring Celsius from managing customer assets. Mashinsky pleaded guilty to criminal charges.
This situation highlighted the importance of due diligence in cryptocurrency investments and the need for greater transparency and regulation in the industry. Ongoing research and debate continue regarding investor protection and the future of cryptocurrency regulation.
Who Was Eligible for the Bankruptcy Settlement?
The Celsius bankruptcy settlement involved different “creditor classes” with varying eligibility and payout structures. Determining one’s specific class was crucial. While having a Coinbase account often streamlined the process, particularly for receiving crypto payouts, it wasn’t mandatory. Proof of a Celsius account and detailed claim information were generally required.
How Much Could Investors Recover?
The bankruptcy settlement targeted a 60.4% recovery rate of approved claims, based on crypto holdings as of July 13, 2022, at 8:10 PM ET. Those not opting out of the class action received an approximate 5% bonus.
The planned payout structure included approximately:
- 28.95%: Bitcoin
- 28.95%: Ethereum
- 14.9%: Ionic Digital Stock
- 6.4%: An as-yet undetermined asset, likely cash.
Distributions of Bitcoin, Ethereum, and Ionic Digital Stock began in January 2024, while the remaining 6.4% awaits scheduling. Approximately 20.8% of holdings were deemed unrecoverable. Market fluctuations could affect the final value received.
It’s important to consult official sources and legal professionals for personalized advice. This information is current as of November 27, 2024, and the situation remains subject to change.
