Celsius is seeking to recover $50 million in locked cryptocurrency.
Celsius Network Ltd., the bankrupt cryptocurrency lender, is attempting to return coins to a small number of users who have had their accounts locked out.
The company sought permission from a US bankruptcy judge to release nearly $50 million in cryptocurrency held on the site in so-called custodial accounts, which were designed to store digital assets rather than earn yields. According to court documents, a full hearing on the claim is scheduled for Oct. 6.
The move reflects a schism among the thousands of people who have been harmed by the company’s insolvency.
According to the company, customers who deposited cryptocurrency with the aim of earning interest on their holdings ceded ownership of the coins to Celsius, while others who simply stored their assets on the platform technically retained possession of the parts.
Celsius’ request for $50 million is just a fraction of the more than $200 million locked up in deposit accounts on the platform. Indeed, many users transferred their holdings from interest-bearing accounts to custodial agreements just before the bankruptcy, which could allow Celsius to take possession of the coins, according to a lawyer for Celsius during a hearing on Thursday.
Custody accounts represent only a small portion of crypto users who have not recovered from Celsius. According to court documents, the market value of assets in the so-called gain accounts was nearly $4.2 billion as of July 10.
Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York is the name of the bankruptcy case (Manhattan).