Crypto Lender Celsius Files to Return $50 Million to Some Customers
Bankrupt cryptocurrency lender Celsius Network has filed a motion at the Bankruptcy Court for the Southern District of New York, seeking approval to release some digital assets belonging to specific customer accounts.
Celsius to Return $50 Million to Few Customers
Celsius’s requests seek to reopen withdrawals specifically for users with funds in Custody/Withhold accounts since account holders maintain control over their assets, unlike users in the Earn and Borrow program.
The firm plans to open withdrawals for $50 million of the $210 million belonging to 58,300 users if its motion is approved.
According to the filing, only 15,680 users with funds in Custody/Withhold accounts are eligible for the potential withdrawal. Furthermore, the list excludes users who transferred more than $7,575 from their Earn and Borrow accounts to Custody/Withhold accounts at least 90 days before the firm filed for bankruptcy.
“Following their analysis, the Debtors have identified significant cryptocurrency assets that they do not believe are property of their estates, and as to which the Debtors do not believe that they have any colorable causes of action under applicable law. Accordingly, the Debtors believe it is fair and appropriate to permit customers to withdraw those cryptocurrency assets at this time,” the filing stated.
Earn and Borrow Account Holders May Not Get Refund
Recall that Celsius filed for bankruptcy protection in July after halting withdrawals for more than a month. In its first court hearing, the crypto lender claimed ownership of assets in the Earn and Borrow accounts in line with the details outlined in its Terms of Use (ToU).
The firm’s lawyers argued that holders of these accounts signed off their crypto title to Celsius. Interestingly, the Earn and Borrow accounts hold most of the funds deposited on the platform.
While the total assets in Celsius’s custody are worth about $210 million, the filing revealed that the company owes its creditors nearly $4.3 billion. Even as the crypto lender is actively seeking ways to raise funds, there is uncertainty as to whether it can raise enough to repay its debts.
~ By William A. Frederick ~
