A United States court has ordered bankrupt crypto firm Celsius to refund its customers $44 million worth of crypto assets.
Judge Orders Crypto Returns
The cryptocurrency lender, which announced its bankruptcy in July 2022, has been ordered by Chief Bankruptcy Judge Martin Glenn to return millions of dollars in crypto funds to its users. The company has been instructed to refund its users the $44 dollar worth of crypto assets in September.
During the ruling, Judge Glenn reportedly stated:
“I want this case to continue. I want creditors to get back as much as possible as quickly as possible.”
In other news, the company has successfully appealed to the court to extend its exclusivity period to February 15, 2023, giving it the monopoly to file the company’s reorganization plans under Chapter 11 guidelines. At the time of the bankruptcy filing, the Celsius team had announced liabilities were between $1 billion and $10 billion, with more than 100,000 creditors.
Escrow funds are owned by customers
A report claimed that Celsius had more than $200 million in assets under custody. However, the company reportedly moved most of these funds (about $200,000) from interest-bearing to escrow accounts shortly before filing for bankruptcy. Under the preferential transfer rules, this could have allowed them to claim ownership of the funds in the brokerage accounts.
However, according to the court order, funds held in escrow accounts must now also be returned to customers, even if they have not been deposited into the company’s interest-bearing accounts. The court order came after advisers and Celsius stakeholders determined that the money in the custodial accounts belonged to the customers, not Celsius.
Executives more willing to line their own pockets
There has been quite a bit of uncertainty about Celsius’ funds, even after the bankruptcy filing. Several high-level executives were accused of lining their pockets instead of thinking about the community. Ex-CEO Alex Mashinsky has been a prime target of these allegations. In early October, reports emerged that Mashinsky had withdrawn $10 million from the platform. Immediately afterward, Celsius froze all user accounts and transactions while still claiming user funds were safe. Two other top executives were accused of stealing money from users a few days after this news broke. Former CSO Daniel Leon and CTO Nuke Goldstein have reportedly stepped down $56 million along with Mashinsky just before the company filed for bankruptcy. The fact that all three top executives had put their own interests ahead of the community has been a bone of contention for the community and has led to a general feeling of ill will, especially towards the disgraced former CEO himself.
Disclaimer: This article is for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.