Judge Orders Bankrupt Crypto Lender Celsius to Return $50 Million to Customers – Here’s What Happened
A US judge working on the Celsius Network bankruptcy case ordered the lender to return crypto worth $50 million to users of custody accounts, Bloomberg reported.
Judge Martin Glenn delivered the order verbally in a hearing on Wednesday. Per the report, this cryptocurrency “never touched the lender’s interest-bearing accounts to its customers.”
The order applies to crypto that was worth roughly $44 million in September – but notably, the lender owes billions to its users.
“I want this case to move forward,” Glenn was quoted as saying in the hearing. “I want creditors to recover as much as they possibly can as soon as they possibly can.”
Celsius filed to return custody holders’ funds to them back in September. The company filed for bankruptcy in July, at the time revealing a deficit of close to $1.2 billion.
Custody vs interest-bearing accounts
There is a massive distinction being made between these two accounts in regard to who gets to claim ownership over the assets in them.
The judge’s order followed a conclusion reached by Celsius advisers and stakeholders that coins placed only into the custody accounts – unlike the funds from customers using Earn and Borrow products – belong to users, not the company.
Most of Celsius’ assets, however, are wrapped up in the coins in interest-bearing accounts, not the custody accounts – and the legal treatment of these, remarks the report, has not been decided yet.
And here is another twist. As of September, the bankrupt company had more than $200 million in custody accounts. Yet, most of those coins were moved to these accounts from interest-bearing accounts just before the bankruptcy.
“That means Celsius may be able to claim ownership of that crypto because of rules surrounding so-called preferential transfers,” Bloomberg reported.
Importantly, the judge gave no order for these coins to be returned, with an exception for transfers smaller than some $7,500, with $11 million in crypto fitting the criteria.
Meanwhile, at 10:40 UTC on Thursday morning, the CEL coin was trading at $0.7, up 3.4% in a day and 35% in a week. Overall, it is down 27% in a month and 81% in a year.
30-days price chart:
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Learn more:
– Crypto News Summary: Celsius Faces US Federal ‘Investigations’
– Celsius Sets Date for Auction of Assets Following Bankruptcy
– Celsius CEO Machinsky Resigns Amid Ongoing Bankruptcy Proceedings
– Celsius Saga Continues: New Filings Reveal ‘Delusional’ Plan for ‘Standalone Reorganization’, Says a Lawyer
