U.S. Bankruptcy Court Rules Celsius Deposits Belong to Company – Regulation Bitcoin News

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A New York bankruptcy court has ruled that the deposits in the high-interest accounts belong to Celsius, the struggling former cryptocurrency lending company, which filed for Chapter 11 bankruptcy protection. in July. The decision sets a precedent that could affect the status of other similar cases involving crypto companies like Blockfi and FTX.

Celsius gains ownership of user repositories

A U.S. bankruptcy court has issued a key ruling in the dispute that Celsius, a former cryptocurrency lending company, and its customers have over ownership of deposits. Judge Martin Glenn, of a New York-based bankruptcy court, ruled in favor of the company, stating that it had the right to these funds, allowing it to exploit the assets in any way, including including lending, selling and pledging such assets for investment purposes.

The company had filed a petition seeking approval for the sale of $23 million of its stablecoin stash on September 15, and the move paves the way for the company to complete the deal. The ruling says Celsius’s terms of service, an agreement that all users must agree to before being served by the company, were “unambiguous” in establishing ownership of those funds deposited in favor of the company.

Affected users and consequences

The decision could affect other cases involving companies that have invoked the benefits of Chapter 11 bankruptcy, such as Blockfi and FTX. 600,000 customers of the lending company are affected by the move, who were part of the Earn program that earned high interest on their accounts, which held $4.2 billion in cryptocurrency. These customers will now be classified as unsecured creditors, which could affect the size and importance of their claims in the future.

This will allow the company to use a portion of the funds to fund its Chapter 11 proceedings. The company previously said in bankruptcy courts that it could only fund operations through March with its current funding.

Celsius’ bankruptcy proceedings have also affected the privacy of its customers, as a filing detailing the usernames, transactions and holdings of every user on the exchange was released in October. More than 18.6 gigabytes of data corresponding to more than 14,000 customers of the exchange were leaked at the time, with the situation being called one of the “most egregious privacy breaches in crypto history.” “, according to some users.

What do you think of the decision regarding the ownership of funds deposited in Celsius accounts? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late in the game, entering the cryptosphere when the price spike happened in December 2017. Having a background in computer engineering, living in Venezuela and impacted by the cryptocurrency boom at the social, it offers a different point of view. on the success of crypto and how it helps the unbanked and underserved.

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