Celsius Network owns most customer crypto deposits: U.S. judge

The majority of Celsius Network’s customers would be last in line for repayment in the crypto lender’s bankruptcy, according to a U.S. bankruptcy judge’s ruling on Wednesday that Celsius Network controls the majority of the cryptocurrency that users placed into its online platform.
About 600,000 accounts that included assets worth $4.2 billion when Celsius filed for bankruptcy in July are impacted by the decision made by U.S. Bankruptcy Judge Martin Glenn in New York. Glenn wrote that the corporation does not have the money to completely reimburse such deposits.
According to the judgement, non-interest bearing account holders and other secured creditors will have higher precedence than the majority of Celsius customers. Whether Celsius has a sizable secured debt was unknown.
The decision also prevents customers with interest-bearing accounts from bickering among themselves for higher priority, preventing a scenario in which some of those customers receive 100% of their deposits back while other customers in a similar situation only receive “a small percentage,” according to Glenn. According to Glenn, Celsius’s terms of service made it apparent that it owned the money that customers deposited into its interest-bearing Earn accounts. Consequently, Earn users will be regarded as unsecured creditors in Celsius’ bankruptcy and would be paid last after Celsius settles bills with greater priority.
Twelve US states and DC had protested Celsius’ attempt to acquire the digital assets. They said, among other reasons, that it was uncertain whether clients understood the terms of service and that Celsius was being investigated for rules violations in multiple places, which may plausibly preclude the company from relying on the conditions of use.
According to Glenn, the decision does not mean that Earn clients will receive “nothing” in the bankruptcy case and it does not preclude any challenges to Celsius’s ownership of the cryptocurrency deposits.