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Celsius bankruptcy judge orders return of some crypto assets to customers
A limited set of Celsius Network clients who had deposits that were never mixed with other Celsius funds were granted relief after a U.S. bankruptcy judge on Wednesday ordered that some consumers should be given their money back.
Judge Martin Glenn of the U.S. Bankruptcy Court is considering more general inquiries about the ownership of cryptocurrency assets placed with Celsius.
According to Celsius' official creditors committee, his decision on Wednesday was restricted to customers who had non-interest bearing custody accounts, whose funds were not mixed with other Celsius assets, and whose accounts were too small for Celsius to try to claw them back to pay other customers.
The amount at risk for owners of custody accounts was originally estimated by the creditors committee to be $50 million.
The ownership of Celsius "earn" accounts and "withhold" accounts has not yet been decided by Judge Glenn.
Before regulatory probes led Celsius to alter course early in 2022, Earn accounts were the company's default account type. These accounts paid interest to consumers and permitted Celsius to use customer cash to make loans.
These regulatory inquiries, which claimed that earn accounts were an unregistered securities sale, compelled Celsius to establish withhold accounts and non-interest-bearing custody accounts.
In June, the New Jersey-based Celsius company stopped allowing withdrawals due to "extreme" market conditions, preventing individual investors from accessing their assets. Celsius declared $4.3 billion in assets and $5.5 billion in liabilities, the most of which were owing to its customers, when it filed for Chapter 11 bankruptcy in July.
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