December 8, 2022
In federal court, a crucial legal issue will be decided concerning whether Celsius Network LLC depositors ceded ownership of their cryptocurrencies in exchange for interest payments, as well as the legal treatment of coins in interest-bearing accounts, which constitute the majority of Celsius’ assets. This decision will be taken by U.S. Bankruptcy Judge Martin Glenn in New York City
Celsius asked US Bankrupcy Judge Martin Glenn for permission to sell $18 million in cryptocurrency to cover operating expenses while devising a repayment plan for creditors.
Glenn’s subsequent decisions will help shape how crypto is treated in accounts frozen at other failed firms like FTX, Voyager Digital Ltd, and BlockFi, which do not have enough funds to repay everyone in full.
Customers’ assets are far more likely to be returned if their Celsius deposits are determined to be theirs. Customers who have Celsius account holdings will be at the back of the line for repayment, receiving pennies on the dollar.
Celsius advisers and several stakeholders decided that coins placed solely in so-called custody accounts belong to users, not the bankrupt company.
Celsius has also asked the judge for permission to sell the $18 million in cryptocurrency in order to keep the business running and pay bills.
The sources for this piece include an article in Reuters.
