HomeNEWSUS Court rules that Celsius owns most customer crypto deposits

US Court rules that Celsius owns most customer crypto deposits

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The U.S. Bankruptcy Court in the Southern District of New York has ruled Celsius as the rightful owner of all crypto assets deposited on its Earn program by users. According to reports, the bankruptcy court made the ruling public yesterday via a 45-page document.

Now, Celsius has gained control over the total amount of the deposited funds in the program. As revealed, the funds in question is about $4.2 billion of crypto assets.

Worthy noting that Celsius’ Earn program is interest-driven. This implies its users usually earn weekly returns on their deposited assets. Furthermore, the crypto lender usually rewards participants of this program with at least 18% interest on their assets. Notably, the Earn program, according to the filing, enjoyed the patronage of 600,000 users.

The Judge, Martin Glenn explained that Celsius’s terms of service indicated that it took ownership of customer deposits for the Earn program. Thus, regarding depositor of the program as unsecured creditors, giving them a lesser priority in the repayment process. 

Now, users who with non-interest bearing accounts and secured creditors will be considered first before those on Earn program. The Judge warned Celsius to avoid repaying a larger amount to a customer and a lesser amount to another customer in the same program.

Insight into Celsius struggles

Worthy of note that the crypto lender, had in the wake of its financial crisis filed for Chapter 11 bankruptcy. Before filing for bankruptcy, Celsius halted withdrawals and deposits on its network.

In the filing before the United States Bankruptcy Court, it revealed that it owes about $4.7 billion, possesses liabilities of $5.5 billion and assets of $4.2 billion. The lender also added that it has  $167 million in cash on hand, to provide ample liquidity in supporting its operations during the restructuring process. 

Last September, the court approved the appointment of an independent examiner to probe the business of the embattled crypto lender. Ever since, the examiner has been investigating Celsius’ digital assets, tax payment procedures, and the current situation of its mining business.

Presently, the crypto lender is seeking to restructure and pay affected customers. Recently, Binbits reported that Celsius filed a motion to extend the deadline for users to submit their claims. Before the filing, the crypto lender set January 3, 2023, as the deadline for customers to submit their claims. As it stands, Celsius has received about 17,200 claims.

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