Bad News for 500,000 Crypto Investors: They Don’t Own Their Accounts

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“More than half a million people who deposited money with collapsed crypto lender Celsius Network have suffered a severe blow to their hopes of recovering their funds,” the Washington Post reports, “the judge in the ‘business bankruptcy case that decided the money belonged to Celsius and not the depositors.’ The judge, Martin Glenn, concluded that Celsius’s terms of service – lengthy contracts that many websites publish but few consumers read – meant that “cryptocurrency assets became the property of Celsius”.

The decision highlights the wild nature of the unregulated crypto industry. On Thursday, New York Attorney General Letitia James moved to impose some sort of restraining order, or at least legal repercussions, on Celsius founder Alex Mashinsky, whom she accused in a lawsuit of defrauding hundreds of thousands of consumers… And while Glenn’s decision won’t affect FTX, whose terms of service were different, some analysts saw the decision extend beyond Celsius.

“There are plenty of other platforms that have similar terms of service to Celsius,” said Aaron Kaplan, an attorney at finance-focused Gusrae Kaplan Nusbaum and co-founder of his own crypto firm. Clients need to “understand the risks they are taking when depositing their assets on poorly regulated platforms,” he said.

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