• A U.S. Bankruptcy Judge ruled that customers who had interest-bearing accounts on the crypto lending platform Celsius Network had turned over control of their assets to the bankrupt crypto lender.
• This means that the deposits are part of Celsius’ bankruptcy estate and customers will not be able to recoup their deposits.
• Celsius held around $4.2 billion in crypto assets when it declared bankruptcy.
On Wednesday, a U.S. Bankruptcy Judge delivered a blow to the customers of crypto lending platform Celsius Network when he ruled that those who had interest-bearing accounts had turned over control of their assets to the bankrupt crypto lender. The court order issued by Judge Martin Glenn stated that the terms of service made it clear that Celsius had taken possession of crypto assets deposited into its Earn product, meaning that the deposits are now part of Celsius’ bankruptcy estate.
In February of this year, Celsius Network declared bankruptcy and ceased operations due to a lack of capital to meet obligations to its creditors. At the time, the platform held around $4.2 billion in crypto assets. The company stated that they had been actively seeking additional capital prior to filing for bankruptcy, but were ultimately unsuccessful in securing the necessary funds.
Celsius Network had been operating since 2018, offering customers the ability to earn interest on their crypto deposits. Customers could deposit funds into their account and receive interest payments in return. However, with the bankruptcy ruling, customers will not be able to recoup their deposits.
The ruling has left many customers of Celsius Network feeling frustrated, as it appears that their funds have been frozen. The ruling also raises questions about the safety of investing in crypto-related services and platforms. While the court’s decision is a setback for Celsius Network customers, it serves as a reminder that investors should always be cautious when it comes to investing in crypto.