In the USA, a new decision has been made regarding the services of Celsius Network. A federal judge has ruled that Celsius’s interest-bearing product “Earn” has transferred control of customers’ assets to the platform. This means they are part of the company’s bankruptcy clauses. Here are the details…
New development in Celsius court
Judge Martin Glenn, the US bankruptcy chief judge in the Southern District of New York, said Wednesday in a court order that Celsius’s terms of service made it clear that it had seized crypto assets invested in the Earn product and hit some customers hoping to get their funds back. Celsius held approximately $4.2 billion in various cryptocurrencies in its Earn product as of July 2022, of which $23 million is in stablecoins. The court document contains the following statements:
Based on Celsius’ strict Terms of Use and subject to any implicit defenses, the Court concluded that when crypto assets (including stablecoins, detailed below) are deposited into their Earnings Accounts, crypto assets become the property of Celsius.
Glenn also wrote that Celsius “made a good business reason to allow the sale” of nearly $18 million worth of stablecoins, a move opposed by state regulators and the U.S. Office of Trustees. The proceeds from the sale of these stablecoins will cover Celsius’s administrative costs over the next few months.
The judge ruled that the terms of the contract were clear
“A rare point of agreement between all parties is the rapid depletion of Borrowers’ liquidity,” Glenn wrote. The decision, which allows Celsius to retain control of the assets in the Earn account, will have ramifications for cryptocurrency investors using similar products on other platforms, some of which have gone bankrupt in recent months. According to the judge, “The issue of ownership of assets in Earn Accounts is a question of contract law. The Borrowers and the Committee claim that the crypto assets deposited in Earn Accounts belong to the Borrowers”.
Some of these account holders claimed that Celsius had violated their own contract or that Celsius had “failing to perform their fiduciary duties”, but the judge said Celsius’s terms of service were clear. The court will hold a hearing on January 10, 2023 to discuss a motion as to when Celsius creditors can present their claims.
What about wallet services?
A less contentious area of concern for clients of bankrupt crypto exchanges is wallet services. Celsius and cryptocoin.com Platforms like BlockFi, a bankrupt crypto lender, often treated wallet funds as if they belonged to their users, not the companies themselves. Still, there is some controversy even in this area. Some clients from BlockFi argued that before BlockFi’s bankruptcy, they tried to convert some funds from BlockFi Interest Accounts into Wallet Accounts, but BlockFi is now trying to reverse some of these transactions. The documents showed that, in total, these accounts totaled about $1.6 million.
According to the document, on-hand customers transferred money from their interest accounts to their wallet accounts between November 10, 2022 and November 18, 2022. On November 10, BlockFi announced it was suspending withdrawals, but according to the court filing, the company did not say it was suspending those conversions. Indeed, according to the documents, at no point in these circumstances did BlockFi say it would suspend transfers from interest accounts to wallet accounts.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Risk Disclosure: The articles and articles on Kriptokoin.com do not constitute investment advice. Bitcoin and cryptocurrencies are high-risk assets, and you should do your due diligence and do your own research before investing in these currencies. You can lose some or all of your money by investing in Bitcoin and cryptocurrencies. Remember that your transfers and transactions are at your own risk and any losses that may occur are your responsibility. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Disclaimer: Advertisements on Kriptokoin.com are carried out through third-party advertising channels. In addition, Kriptokoin.com also includes sponsored articles and press releases on its site. For this reason, advertising links directed from Kriptokoin.com are on the site completely independent of Kriptokoin.com’s approval, and visits and pop-ups directed by advertising links are the responsibility of the user. The advertisements on Kriptokoin.com and the pages directed by the links in the sponsored articles do not bind Kriptokoin.com in any way.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.