Celsius Bankruptcy Judge Orders Return of $50M in User Assets

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Chief bank­rupt­cy judge of the South­ern Dis­trict of New York Mar­tin Glenn has ordered failed cryp­to lender Cel­sius Net­work to return cryp­tocur­ren­cy worth $50 mil­lion back to its customers.

Glenn deliv­ered the order dur­ing a hear­ing on Wednes­day and applies to an esti­mat­ed $44 mil­lion worth of cryp­to held in cus­tody accounts that belong to Cel­sius users, and not the company.

Coins involved in trans­fers under $7,500 from inter­est bear­ing accounts to cus­tody accounts were also ordered to be returned, a lit­tle over $11 mil­lion worth of cryp­to fell into that group, court papers show. 

The $50 mil­lion is just the tip of the ice­berg, as it is esti­mat­ed that the fall­en cryp­to lender owes over $4.7 bil­lion to its users.

“I want this case to move for­ward,” Glenn said in a hear­ing first report­ed by Bloomberg. “I want cred­i­tors to recov­er as much as they pos­si­bly can as soon as they pos­si­bly can.”

The major­i­ty of the col­lapsed lenders assets are cryp­toas­sets in inter­est bear­ing accounts, and it is pos­si­ble that Cel­sius could claim own­er­ship of those assets based on rules around pref­er­en­tial trans­fers. The deci­sions on the future of these assets has yet to be made. 

Accord­ing to pre­vi­ous dec­la­ra­tion fil­ings, Cel­sius had $5.5 bil­lion in lia­bil­i­ties and $4.3 bil­lion in assets — leav­ing it with at least $1.3 bil­lion in short­fall, though the actu­al hole may be larg­er.

Cel­sius first filed for bank­rupt­cy in July this year after the col­lapse of Sin­ga­pore­an-based hedge fund Three Arrows Cap­i­tal, which failed to repay loans twice after the col­lapse of the Ter­ra ecosystem.

Its bank­rupt­cy pro­ceed­ings are cost­ing the fall­en com­pa­ny a small for­tune. Finan­cial advi­so­ry firm for debtors Alvarez & Marsal North Amer­i­ca asked to be paid $2.3 mil­lion — 80% of the total com­pen­sa­tion sought — for its ser­vices between July 14 and Aug. 31.


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