According to reports, a US bankruptcy judge has granted the Celsius Network ownership rights to $4.2 billion in customer crypto deposits. The judge explicitly ruled that the crypto lender owns most of the assets that were deposited into its online platform.
This means, most Celsius customers will not be prioritized during repayment. However, customers who held non-interest-bearing accounts along with other secured creditors will stand fairly ahead in the priority queue.
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Will Celsius’ ‘Earn’ Customers Get Nothing?
The latest ruling impacts around 600,000 accounts that together held assets worth more than $4 billion. The judge, Martin Glenn, noted that the company does not have enough funds to fully back those deposits.
Furthermore, Glenn pointed out that Celsius’ terms of service underlined that the crypto lender took ownership of customer deposits into its interest-bearing Earn accounts. The ruling gives Celsius authority to sell approximately $18 million stablecoins that were being held in customers’ Earn accounts.
However, the judge clarified that the ruling did not mean that Earn customers will get “nothing” in this scenario. They will be treated as unsecured creditors in Celsius’ bankruptcy. It implies that they will be catered to only after Celsius settles higher-priority debts.
Glenn’s ruling noted,
“The Court does not take lightly the consequences of this decision on ordinary individuals, many of whom deposited significant savings into the Celsius platform. Creditors will have every opportunity to have a full hearing on the merits of these arguments during the claims resolution process.”
Twelve US states and the District of Columbia opposed the lender’s bid to claim the digital assets. They contended that it was not clear if customers understood the terms of service. They also added that being under investigation in several states for violating regulations could potentially prevent the company from relying on the terms of use.
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