- A federal judge will decide whether Celsius owns customer cryptocurrencies.
- Celsius asked for permission to sell $18 million of crypto to cover operating expenses.
- Creditors claim unclarity in the terms of service which altered over time.
A pivotal legal issue will be decided in federal court regarding whether depositors at Celsius Network LLC relinquished ownership of their cryptocurrencies in return for interest payments. The effect of this decision will also be felt among other crypto bankruptcies.
Celsius requested US Bankrupcy Judge Martin Glenn’s permission to sell $18 million of crypto to cover operating expenses while deducing a plan for repaying creditors.
However, these coins are owned by Celsius users, who invested these assets into interest-bearing accounts prior to the filing of the Chapter 11 bankruptcy in July.
The issue Glenn must resolve centers around whether the crypto in Celsius’s interest-bearing accounts belongs to the company or to its depositors.
Glenn stated the significance of this issue to the resolution of the bankruptcy. This will assist future bidders in understanding more clearly what they are buying.
The Federal Judge clearly declared in the court:
I am going to go ahead and decide who it belongs to. The real issue is, how we can cut this enormous administrative expense and get to the goal line, to the exit?
With Celcius’ escalating legal expenses, this decision must be made quickly or “there will be a corpse left,” the judge further added.According to Glenn, the ruling will not be given until next week at the earliest.
Celsius’s legal team contended that when clients accepted the company’s terms of service, they also consented to give up ownership of the coins they deposited in interest-bearing accounts.
The bankruptcy is Celsius Network LLC, 22-10964, filed under US Bankruptcy Court for the Southern District of New York (Manhattan).
Some creditors and several US state attorneys general claimed on Monday that the terms of service were unclear and that they had altered over time.
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