Disgruntled Clients Sue Celsius Network to Recover $22.5m in Crypto

Crypto lending platform, Celsius Network, is dealing with new legal concerns as displeased users take legal action to retrieve their assets after the platform halted withdrawals in June. 

Celsius “Violating Debtors Terms of Use” 

The U.S. Bankruptcy Court for the Southern District of New York on Wednesday received a lawsuit from an unofficial group of 64 Celsius custodial account holders seeking the return of their funds.

In all, the bitcoin assets stored in Celsius’ custody service are valued at more than $22.5 million, according to court filings. The creditors are attempting to retrieve these assets. The bankruptcy-focused law firm Togut, Segal & Segal is defending the ad hoc organization.

According to the plaintiffs, Celsius “has not recognized any withdrawals from any programs,” including custody services. This is in violation of the “clear text of the debtors’ terms of use,” which state that title of custodial assets “always stays with the user,” according to the complaint. The right to any digital assets in Celsius’ custodial wallet should “at all times stay” with clients, per the company’s terms of usage, and not be given to Celsius.

“Celsius will not transfer, sell, loan or otherwise rehypothecate eligible digital assets held in a custody wallet unless specifically instructed by you, except as required by valid court order, competent regulatory agency, government agency or applicable law,” the statement reads.

Celsius Network Trying to Recover from the Bear Market

Celsius Network is a financial platform that allows users to purchase and trade cryptocurrencies. It is also a cryptocurrency software that enables you to purchase 10 cryptocurrencies, which you can then exchange for more than 30 different e-currencies.

One of the numerous crypto lending platforms that have encountered significant problems as a result of the present bear market and related liquidity problems in the crypto lending industry is Celsius Network. The majority of the company’s obligations, totaling $1.2 billion, are owing to its customers. In the middle of July, Celsius filed for Chapter 11 bankruptcy protection.