Celsius

Celsius Files to begin Withdrawals for few Customers

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Celsius Files to begin Withdrawals for few Customers:

Few weeks after filing for bankruptcy protection, the distressed cryptocurrency lender, Celsius Network, is seeking court permission to allow few customers withdraw their digital assets.

Celsius
Celsius

In a Thursday filing with the United States Bankruptcy Court for the Southern District of New York, Celsius motioned for some customers’ assets held in its Custody Program and Withhold Accounts to be released to the owners.

The filed motion seeks the approval of the Bankruptcy Court to release approximately $50 million of the over $225 million held in the Custody Program and Withhold Accounts only to users whose assets always existed in the two account types.

By default, Celsius’ Custody and Withhold Accounts is like a storage wallet, allowing users to maintain legal ownership of their stored cryptocurrencies.

However, this policy is not applicable to users whose assets are held in accounts offering annual crypto earnings or borrowing services- Including the Earn and Borrow accounts.

What to note from this development

Sequel to the above, users who transferred their assets to Custody/Withhold accounts before the company’s fall will not be eligible for the upcoming withdrawal.

Reason being that Celsius grouped the holdings of these accounts into

Pure Custody/Withhold Assets” and “Transferred Custody/Withhold Assets.”

The Crypto lender lawyers disclosed that the “pure” assets refer to cryptocurrencies that were not transferred from the Earn or Borrow Programs.

Therefore, if the motion is approved by the Bankruptcy Court, customers who transferred their assets to the Custody Program 90 days before the company’s bankruptcy filing would not be eligible to withdraw their assets.

Remember that the crypto firm’s legal team argued that customers transferred ownership of their digital currencies to the firm when they deposited the assets on the platform.

Which means that approximately 80% of users’ funds on the crypto lender account belong to Celsius since most of the assets are held in Earn and Borrow accounts, cryptopotato reported.

Although, the company acknowledged in its filing that most customers would likely not support the new development or find it interesting.

However, the company pointed out that its latest move is just a first step taken to ensure that customers recover their funds.

“The relief sought in this motion may not be supported by every customer or stakeholder, and that it may not go as far as some Custody Program customers and Withhold Account holders may wish. This motion is a first step toward, and not the last word on, efforts to return assets to customers where possible without jeopardizing the Debtors’ efforts to maximize value and distribute that value to all customers as fairly as possible,” the filing reads.

How it started

Few days into May, Celsius had over $11 billion in assets under management (AUM).

But into June, the lending company froze all withdrawals, citing extreme crypto market conditions.

Currently, the lending firm is facing several lawsuits, including a fraud lawsuit filed by its former money manager.

Meanwhile, the United States Bankruptcy Court has scheduled a hearing for the proposed motion on Oct. 6.

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