According to the Bloomberg report, US Bankruptcy Judge Martin Glenn ordered Celsius Network LLC to return cryptocurrency that never touched the lender’s interest-bearing accounts to its customers.
The Court Filing
Celsius was created in 2017 to be one of the first cryptocurrency platforms to which users could transfer their crypto assets and earn rewards on crypto assets and/or take loans using those transferred crypto assets as collateral. Celsius has more than 1.7 Million registered users and approximately 300,000 active users with account balances greater than $100.
Celsius’s principal goal in these Chapter 11 cases is to maximize the value of their estates and distribute that value to their customers as quickly and fairly as possible.
Since the Petition Date, Celsius and their advisors have been analyzing whether the cryptocurrency assets that were transferred to the Celsius’ platform by customers are property of the Celsius’ estates, or property of the Celsius’ customers.
In the court filing, there were some important exclusions. At present, Celsius is not seeking to release any Custody Assets or Withhold Assets to any current or former employees or insiders, or affiliates of any current or former employees or insiders. No account held by a customer with an outstanding loan will be unfrozen pursuant to this Motion.
The following order is verbally delivered in a hearing on Wednesday. It applies to a pile of crypto worth around $44 Million in September. It is a small fraction of the Billions of dollars of coins owed to Celsius users.
After filing for bankruptcy in July, in September Celsius filed to return custody holders’ funds to them, ahead of a separate hearing to address ongoing questions about its efforts to restructure and relaunch its operations.
According to the Court filing, Celsius has about 58,300 users who collectively deposited over $210 Million with its custody and withhold, with 15,680 customers holding “Pure Custody Assets” worth around $44 Million.
The Bankruptcy Court for the Southern District of New York, which is overseeing the case, scheduled a hearing for Oct. 6 to discuss the matter.
Celsius’s Argument
Here the argument of Celsius was that unlike Celsius customers using its Earn or Borrow products, customers with custodial accounts still have ownership of their crypto assets. Celsius was just a storage provider. Thus, these funds belong to the customers, not to Celsius’ estate.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2022/12/09/celsius-judge-orders-it-to-return-50m-of-users-crypto/