$4.2B Locked in Bankruptcy Estate

According to a ruling by a U.S. federal judge, about $4.2 billion in customer deposits remain with the insolvent crypto lender Celsius.

According to a ruling by a U.S. federal judge, about $4.2 billion in customer deposits remain with the insolvent crypto lender Celsius. The judge says Celsius’ Earn products are company property, not customers’ property. A major setback for affected investors.

The chief bankruptcy judge for the Southern District of New York, Martin Glenn, said Celsius’s terms make it clear the company owns the crypto assets placed in the Earn product.

In the court order, more information is provided: "When crypto assets were placed in Earn accounts, they became Celsius’s property; and the crypto assets on the Earn accounts on the date of the petition became part of the debtors’ bankruptcy estate."

In response to the accusation that Celsius failed its fiduciary duties, the federal judge said the platform’s terms of use were unambiguous.

How much investors will get back remains uncertain. According to information from Stretto, approximately 17,000 creditor filed claims have been submitted so far by creditors seeking repayment from Celsius. On July 13, 2022, Celsius Network LLC and several of its subsidiaries filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.