Crypto lender Celsius seeks to return $50m to locked out users
The money is only around a quarter of the more than $200m stuck in custody accounts on the platform.
Celsius, the crypto lender just over a month into bankruptcy proceedings, is seeking to return money to a portion of its users that are now locked out of their accounts.
The company has asked for a US bankruptcy judge’s permission to return around $50m worth of crypto stuck on the platform in “custody accounts”.
According to Celsius, the money it is looking to return to users is not part of the bankruptcy estate, as it sits in accounts designed to store digital assets rather than generate returns.
Funds from its Earn and Borrow clients, however, do not fall under the request, as users supposedly signed over their ownership of the coins to Celsius when they deposited the crypto with the aim of earning interest.
Court papers indicate that a full hearing on the request is set for 6 October.
This development highlights a split between users who are suffering from the company’s bankruptcy claims: those who used the platform simply to store their coins and those who deposited crypto with the intention of earning interest.
Many users shifted their holdings from interest-bearing accounts to custody arrangements shortly before the bankruptcy, presumably in an attempt to keep hold of their coins.
Celsius is trying to argue that only “pure” custodial account holders are eligible for returns, and not those who initially deposited funds in Earn products and later switched to custody accounts.