- Celsius Network has won the rights to 600,000 Earn customers’ crypto funds
- The Judge has granted the platform the right to sell millions of dollars of stablecoin
Celsius Network has just won ownership of the $4.2 billion worth of crypto deposited by its customers, according to WSJ. This move now allows the bankrupt platform to use the funds however it wants. Notably, this fund belonged to nearly 600,00o Earn program users. This program initially allowed customers to make interest on their crypto deposits.
The ruling read,
“when the cryptocurrency assets (including stablecoins, discussed in detail below) were deposited in Earn Accounts, the cryptocurrency assets became Celsius’s property; and the cryptocurrency assets remaining in the Earn Accounts on the Petition Date became property of the Debtors’ bankruptcy estates”
Not your keys, not your crypto
With this, Earn customers are now classified as unsecured debtors under bankruptcy law. Moreover, the court document stated that there will not be enough funds to repay all the customers in full. On top of that, customers will have to “prevail with their arguments that they own the cryptocurrency assets in their accounts, they hope to recover 100% of their claims”
Moreover, the ruling even spoke about the platform’s move to sell $18 million stablecoins it held in Earn accounts. The U.S. states had sought to block this sale arguing that it was unnecessary given Celsius Network still had money left to conduct operations for a few more months. The Judge, however, favored Celsius even in this matter, ruling,
“it is unnecessary to resolve whether the proposed sale of stablecoins would be in the ordinary course of business because the sale should be approved outside the ordinary course of business”
Notably, the crypto lending platform went under in July 2022, a month after the platform suspended its withdrawals citing extreme market conditions. At the time, the platform held customer cryptocurrencies worth $4.2 billion at the time in assets, while its liabilities stood at $5.5 billion. Additionally, the Earn program’s stablecoin was worth $23 million as of September 2022.
This case could act as a precedent for how customers’ cryptocurrencies would be handled in bankruptcy proceedings in the United States. And, it should be noted that Celsius is not the only crypto firm that’s currently in the midst of bankruptcy in the US. Notably, FTX US was the most recent to join the list of bankrupt crypto platforms.
