Law Decoded, Aug. 29–Sep. 5: Celsius is ready to give money back, but not much
United States-based crypto lending platform Celsius, which collapsed and stopped the withdrawal option amid the market meltdown in June, pledged its readiness to partially return money to customers. However, there’s a catch, as the motion company has filed with the United States Bankruptcy Court, would only apply to Custody and Withold Accounts and for custody assets worth $7,575 or less in value.
The community response to the motion has been mixed, with some creditors happy to get back at least some of the frozen funds, while some industry leaders criticized the platform’s management. BnkToTheFuture.com CEO Simon Dixon drew attention to the fact that the possible release of $50 million wouldn’t be that impressive, given the $210 million in assets Celsius still has in custody. According to the company’s filing, though, the motion is merely a “first step forward, and not the last word on, efforts to return assets to customers.”
The benevolence of this step could also be questioned in the light of a complaint, filed with the United States Bankruptcy Court for the Southern District of New York a day earlier by an ad hoc group of 64 custodial account holders. The creditors seek to recover more than $22.5 million worth of cryptocurrency assets collectively held in Celsius’ custody service and noted that Celsius’s previous refusal to honor any withdrawals contradicts the “plain language of the debtors’ terms of use.” The company has a $1.2 billion gap in its balance sheet, with most liabilities owed to its users. Celsius filed for Chapter 11 bankruptcy protection in mid-July.
Lawmakers in the California State Assembly passed the Digital Financial Assets Law, which will require digital asset exchanges and crypto companies to have
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