- Celsius assets from the interest-bearing ‘Earn’ belong to the crypto lender and not the customers.
- Judge Martin Glenn made it clear that Celsius takes possession of crypto assets deposited into Earn.
- Celsius held around $4.2 billion in various cryptocurrencies in its Earn product as of July 2022, $23 million of the assets are held in stablecoins.
Celsius, a bankrupt crypto lender owns $4.2 billion worth of cryptocurrencies in its Earn product. The presiding judge ruled in favor of the lender and stated that assets deposited to its interest-bearing products belong to the lender.
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Celsius owns customer deposits to interest-bearing ‘Earn’ product
Celsius Network LLC is a bankrupt crypto lender headquartered in New Jersey. The platform offered interest-bearing ‘Earn’ assets to customers and as of July 2022, the lender held $4.2 billion worth of cryptocurrencies of which $23 million are held in stablecoins like USD Tether (USDT) and USD Coin (USDC).
The recent court ruling in the bankrupt crypto lender’s case has raised questions on whether customer deposits to exchange products belong to them in the event of a bankruptcy. Martin Glenn, the Chief US bankruptcy judge in New York said, in a court order, that Celsius’ terms of service make it clear that the platform takes possession of deposits into its Earn product.
The ruling dealt a heavy blow to users hoping to recover their funds from the bankrupt firm. Judge Glenn wrote,
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').
The ruling sets a precedent for crypto investors using similar products across other platforms, that suffered a fallout from the spreading FTX contagion. The Judge’s statement allows Celsius to control user assets in its ‘Earn’ product.
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