Bankruptcy judge orders $44M in crypto to be returned to Celsius customers
A federal judge has ordered crypto lender Celsius to return crypto worth around $44 million to the platform’s custody program customers.
According to Bloomberg, the verbal order was delivered by United States Bankruptcy Judge Martin Glenn in a Dec. 7 hearing, with the judge noting:
“I want this case to move forward. I want creditors to recover as much as they possibly can as soon as they possibly can.”The amount — which applies only to crypto held within custody accounts — is a tiny fraction of the billions Celsius owes creditors, and the latest decision comes after an agreement was reached between Celsius advisers and stakeholders that crypto deposited in the custody accounts belonged to its users and not the platform.
It is important to note that this order only applies to pure custody assets — those that have never touched Celsius’ Earn accounts and have only ever been held in the custody program.
Celsius held over $210 million in custody accounts as of Aug. 29, but only around $44 million of funds fit within the latest order's criteria.
On the other hand, Celsius' Earn accounts, which are the accounts that enabled depositors to earn interest is where the majority of the $4.7 billion worth of user funds is currently being locked up.
Celsius has argued that users who deposited funds within its earn accounts gave up ownership of the funds when they agreed to the company’s terms of service, and a Dec. 5 Bloomberg report suggests that Celsius is looking to sell $18 million of stablecoins held in these accounts to fund its reorganization with Glenn set to address the issue of fund ownership on Dec. 12.
Related: Novogratz’s Galaxy Digital to acquire Celsius’ GK8 in bankruptcy garage sale
Meanwhile, on Dec. 5 the lender received approval from the judge for a $2.8 million key employee retention program (KERP) which it filed on Oct. 11.
#CELSIUS HEARING LIVE: KERP is approved. Discussing Celsius Exclusivity now. K&E talking about the Feb 15 compromise. Expanding that the auctions and plan formation are all in coordination with the UCC and they are cognizant of the level of frustration in the community.
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) December 5, 2022The bonuses will be payable to select employees, and are intended to ensure its employees remain with the firm so that it may continue its limited business operations.
Celsius employees have been quitting in droves, with only 170 remaining with the firm compared to the 370 it had when it first started the bankruptcy proceedings.