A federal judge has ordered cryptocurrency lender Celsius. The platform’s custody program has ordered its customers to return approximately $44 million worth of cryptocurrencies. Here are the details…
Cryptocurrency platform Celsius is expected to give money to creditors
As Cryptokoin.com reported, in September, nearly a month after Celsius filed for bankruptcy in July, it filed to return custody funds to them, ahead of a separate hearing to address ongoing questions about its efforts to restructure and restart its operations. .
According to the documents, Celsius has around 58,300 users who have collectively deposited over $210 million in custody and detention. Its 15,680 clients hold approximately $44 million in assets. The Bankruptcy Court for the Southern District of New York, which heard the case, had scheduled a hearing for October 6 to discuss the matter.
The order was delivered orally at a hearing on Wednesday. A US bankruptcy judge handling the Celsius Networks bankruptcy case has ordered the crypto lender to return $44 million worth of crypto to custodian account users. The verbal order was given by US Bankruptcy Judge Martin Glenn at a hearing on December 7, according to Bloomberg. The judge noted:
I want this case to move forward. I want creditors to take back as much as possible as soon as possible.
Valid only for funds in the custodian account
The amount that applies only to crypto held in custody accounts is a small fraction of the billions of dollars Celsius owes its creditors. Also, the latest decision came after an agreement was reached between Celsius advisors and stakeholders that the cryptocurrency was deposited into custody accounts owned by its users. It should be noted that this order only applies to pure custody assets. So these are the ones whose Earn accounts have never been touched and are only kept in the custody program.
Celsius had over $210 million in custody accounts as of August 29. However, only about $44 million in funding fits the final order’s criteria. On the other hand, Celsius’s Earn accounts, which are accounts that allow depositors to earn interest, are currently where the vast majority of $4.7 billion in user funds are locked.
Celsius: Users gave up ownership of their funds
Celsius claimed that users who deposit funds into their earnings accounts give up ownership of the funds when they accept the company’s terms of service. A report published in Bloomberg on Dec. 5 shows Celsius plans to sell $18 million worth of stablecoins held in these accounts. Meanwhile, on December 5, the platform received judge approval for its $2.8 million “employee retention program” (KERP), which it presented on October 11.
Premiums will be paid to selected employees. In other words, it aims to ensure that its employees stay with the company so that they can continue their limited commercial activities. When bankruptcy proceedings first began, Celsius had 370 employees. Now that number has dropped to 170. In other words, employees quit the job en masse.
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