Judge Rules Celsius Networks Owns Customers' Crypto Deposits
A federal bankruptcy judge ruled that Celsius Network owns most of the cryptocurrency that customers deposit on its online platform, meaning that Celsius customers will be the last to receive repayment from the crypto lender.
In a 45-page decision, Judge Martin Glenn, the chief U.S. bankruptcy judge in the Southern District of New York, concluded that the deposits in the lender's yield-bearing Earn accounts belong to Celsius, not individual account holders. Celsius had 600,000 accounts in its Earn program when it filed for Chapter 11 in mid-2022. The accounts collectively held about $4.2 billion, including stablecoins then valued at around $20 million.
«The Court concludes, based on Celsius’s unambiguous Terms of Use, and subject to any reserved defenses, that when the cryptocurrency assets (including stablecoins, discussed in detail below) were deposited in Earn Accounts, the cryptocurrency assets became Celsius’s property; and the cryptocurrency assets remaining in the Earn Accounts on the Petition Date became property of the Debtors’ bankruptcy estates (the 'Estates'),» Glenn wrote.
Some account holders believed that Celsius was in breach of contract; however, Glenn disagreed, writing, «The Court finds that there was a valid contract between Celsius Account Holders and Celsius and that the contract terms unambiguously transferred all right and title of digital assets to Celsius.”
In separate news, New York's attorney general sued Celsius Network founder Alex Mashinsky on Thursday, claiming he defrauded investors of billions of dollars in digital currency by concealing the failing health of his now-bankrupt cryptocurrency lending platform.
A complaint filed by New York state Attorney General Letitia James said
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