Celsius Network has informed a New York bankruptcy court in a petition that it will return around 22% of the funds in its possession to 58,300 clients, whose assets are worth a combined $48M.
The embattled cryptocurrency lender Celsius Network is asking the court for permission to permit a select number of customers to withdraw their digital assets, weeks after filing for bankruptcy protection.
Celsius to Release $50M Worth of Assets to Customers
The cryptocurrency lender filed a motion on Thursday, the 1st of September, asking the Southern District of New York bankruptcy court to order the release of client assets held in its custody program and withhold accounts. The motion requests that only users with assets that have always existed in the Custody Program and Withhold Accounts be granted access to around $50 million of the more than $225 million kept in those accounts.
By design, Celsius’ Custody and Withhold Accounts worked as storage wallets while letting users keep possession of the digital currency they stored. Users whose assets are kept in accounts that provide yearly crypto earnings or borrowing services, such as the Earn and Borrow accounts, are exempt from the regulation.
Users won’t be qualified for future withdrawal if they moved funds to Custody/Withhold accounts before the firm went bankrupt. Because the crypto lender divided the assets in these accounts into “Pure Custody/Withhold Assets” and “Transferred Custody/Withhold Assets”.
According to the firm’s attorneys, “pure” assets are digital currencies that have not been moved from the Earn or Borrow Programs. Customers who moved their money from other Celsius accounts to the Custody Program 90 days before the firm filed for bankruptcy would not be permitted to withdraw their assets if the motion is granted.
The disagreement over which digital assets are held by customers and which are included in the company’s estate in the bankruptcy proceedings has a significant impact on Celsius’s division of which account holders may be able to reclaim their monies.
Celsius Network Still Has a Lot to Recover
Celsius Network is one of the many crypto lending platforms that have experienced serious issues as a result of the current bear market and associated liquidity issues in the crypto lending sector. The majority of the $1.2 billion in debt owed by the business is to its clients.
Some weeks back, the crypto lending company faced legal issues as irate customers filed lawsuits to recover their funds after the network stopped allowing withdrawals in June. The unofficial group of 64 Celsius custodial account holders who want their money back filed a case in the U.S. Bankruptcy Court for the Southern District of New York on Wednesday. According to court documents, the total value of the bitcoin assets kept in Celsius’ custody service is more than $22.5 million. These assets are being sought for by creditors.