In the latest court ruling, Celsius Network has been rewarded the rights to interest-bearing accounts, pushing actual account holders to the end of the repayment queue.
Big Blow For Earn Account Holders
Celsius customers can forget about getting their funds back from the defunct crypto lending platform as the new year has brought even more unfavorable tidings for them. On January 4, a New York judge ruled in Celsius’s favor, establishing its rights to earn deposits on interest-bearing accounts held on the lending platform. This spells bad news for the customers as this means that Celsius Earn account holders can only get a fraction of their initial investment back.
Celsius is also currently under fire because of its pending bills with the mining company Core Scientific. According to an agreement between the two, Core Scientific has turned off power to 37,000 mining rigs belonging to Celsius due to non-payment of electricity bills.
Judge Rules In Favor Of Celsius
The company filed for Chapter 11 bankruptcy back in July 2022 after taking major hits in the Terra LUNA debacle. According to the bankruptcy filings, the Celsius platform held around 600,000 accounts with total assets valued at a sizeable $4.2 billion. The latest ruling comes from bankruptcy judge Martin Glenn, who referenced the company’s terms and conditions and declared that the funds in Earn accounts were company property.
The judge ruled,
“The Court concludes, based on Celsius’s unambiguous Terms of Use … that when the cryptocurrency assets 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.”
According to the judge, the company’s terms of service clearly stated that all customer deposits into Earn Accounts were under the company’s ownership and would be treated as unsecured creditors in bankruptcy proceedings. This means that repaying these customers is not high on Celsius’s priority list and that the company will repay its higher-priority debts first with the available funds.
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Previously Directed To Return Funds
However, it is interesting to note that Judge Martin Glenn had previously directed Celsius to refund customer funds. Not long ago, in December 2022, Judge Glenn addressed the lending platform and advised it to return investors’ money.
Judge said,
“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 judge had also stated that the funds held in escrow accounts must be returned to customers, even if they did not enter the company’s interest-bearing accounts.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.