Judge Rules that Customer Assets Belong to The Bankrupt Crypto Lender in Celsius ‘Earn Program’ Dispute
On Wednesday, a U.S. bankruptcy judge ruled that Celsius Network controls the majority of the cryptocurrency deposited on its online platform.
This means that most Celsius users will be at the end of the line for repayment in the event of the company’s bankruptcy.
Customers Last in Line To Be Repaid
Chief U.S. Bankruptcy Judge Martin Glenn in the Southern District of New York ruled that Celsius’s terms of service indicated that the company takes possession of cryptocurrency assets sent into its Earn product.
This decision is a setback for some customers who were hoping to recover their funds from the company.
The petition stated that as of July 10, 2022, the bankrupt cryptocurrency lender, Celsius, had over 600,000 accounts in tne program with a total value of approximately $4.2B.
Among these accounts, stablecoins made up approximately $23 million in value. However, the judge ruled that all of these is now Celsius estate’s.
The Celsius Earn program enabled users to earn weekly interest payments on their deposits of cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
The annual interest rate offered by the platform could reach as high as 18%, and the specific rate depended on the chosen time horizon and token.
The petition stated that as of July 10, 2022, the bankrupt cryptocurrency lender, Celsius, had more than 600,000 accounts in its Earn program with a total value of approximately $4.2 billion.
Celsius To Do Whatever It Pleases With The Assets
Among these accounts, stablecoins made up approximately $23 million in value. However, the judge ruled that all of this now belongs to the estate of Celsius.
The ruling contradicts the belief held by many Celsius customers, who argued that the money in their accounts belonged to them.
Last month, the platform encountered legal conflict with its users while attempting to sell approximately $18 million worth of stablecoins from Earn accounts in order to sustain its business. The dispute centered on the ownership of the deposited funds, but the ruling now gives Celsius the authority to sell those assets.
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