Bankruptcy Judge Orders Celsius to Return $44M in Cryptocurrencies

The U.S. bankruptcy judge responsible for the Celsius Network case has ordered the bankrupt crypto lender to return around $44 million worth of cryptocurrencies. 

According to Bloomberg, the ruling by Judge Martin Glenn will impact customer funds that never touched the firm’s flagship interest-bearing lending service, which represents a fairly small minority of the overall customer funds held by Celsius.

According to a recent court filing, around 58,300 users held assets worth $210.02 million in its interest-bearing Earn Program or its Borrow Program. 

There were just 15,680 customers, however, who held around $43.87 million in what’s known as “Pure Custody” the entire time. It is this latter group that will see 100% funds returned, as per the bankruptcy court judge.

“Pure custody” would include users Celsius’s Custody and Withold Accounts, which effectively acted as crypto wallets.

But it is only users who held their funds in “Pure Custody” the entire time that will get 100% of their capital back due to rules around “preferential transfers.”

Customers that transferred from Celsius’ interest-bearing services into “Pure Custody” after the firm’s many financial issues became apparent, a period which the filing determines as 90 days before the firm declared bankruptcy on July 13, are only set for a return of capital up to a value of $7,575.

The above condition is set to impact around $11 million of crypto, according to the filing. 

Users impacted by the demise of Celsius, who kept money in any of the services they offered, have until January 3 to file their claim, as per an announcement by the company.

The latest development in the high-profile court case comes after the lender became one of the most high-profile victims of the crypto winter after it slid into Chapter 11 Bankruptcy in July, reporting an almost $1.2 billion black hole in its balance sheet.

Celsius bankruptcy auction

Alongside today’s news, other industry bidders are busy snapping up what’s left of Celsius’ remaining assets.

Earlier this week, famed American investor Mike Novogratz’s Galaxy Digital won a bid to acquire GK8, a self-custody crypto firm that has been acquired by Celsius in 2021. 

Though the amount paid was undisclosed, it was reportedly much lower than the $115 million it was originally acquired for in November 2021.