By
Temitope Olatunji
April 26th, 2024
The filing also revealed that, as of August 29, about 58,300 users had “custody assets” worth about $210 million and approximately 5,000 users held “withhold assets” worth about $15 million.
Crypto lender Celsius is looking to reopen withdrawals for certain clients, three months after halting it.
The latest development comes after the company revealed in a filing submitted in the Bankruptcy Court for the Southern District of New York, that customer assets held in the “Custody Program and Withhold Accounts” are not the company’s property and thus customers should be allowed to withdraw them.
In the filing submitted on Thursday, the beleaguered crypto firm claimed that customers of the custody program own their assets, unlike customers of its Earn or Borrow programs.
The firm, however, added that there is contention about who qualifies. According to the terms of service, Celsius has determined that the assets under the Earn and Borrow programs are property of the estate.
The firm also stated that the necessary analysis to determine whether specific custodial customers, such as those who moved money from the company’s Earn and Borrow programs, qualify has not yet been done.
Legal counsel for the customers however argued that the relief should be extended to all owners of custodial accounts.
“The Debtors believe that assets in the Earn Program and the Borrow Program are likely property of their estates, and that the transfer of such assets to Custody Program or the Withhold Accounts would have been a transfer of the Debtors’ property to customers on account of such customers’ claims against the Debtors,” Celsius stated in the filing.
Such customers held digital assets including native blockchain coins such as Bitcoin and Ethereum, staking coins such as DASH, and utility tokens such as CEL.
The filing also revealed that, as of August 29, about 58,300 users had “custody assets” worth about $210 million and approximately 5,000 users held “withhold assets” worth about $15 million.
The filing comes a day after a group of custodial-account holders at the firm, filed a complaint in court to recover their assets.
The group, made of 64 customers and represented by bankruptcy-focused law firm Togut, Segal & Segal, sought to recover more than $22.5 million worth of assets collectively held in Celsius’s custody program.
According to the petition, the 64 individuals have at least $22.5 million in cryptocurrencies held in various accounts on Celsius. And claimed that they should be entitled to get their money back regardless of the outcome of the bankruptcy proceedings.
Only a small portion of Celsius’s overall liabilities are assets kept in the company’s custody program. Recent court records revealed that Celsius has a $2.8 billion balance sheet hole as a result of its liabilities exceeding its assets by more than $6.7 billion.
The court will discuss the motion at a hearing scheduled for October 6.