Celsius Custody Customers Awarded $44 Million Repayment

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  • Some Celsius customers are due to get a payout after a ruling this week
  • Celsius Custody or Withhold account holders are entitled to a payout of their coins, with restrictions
  • Celsius admits that coins in custody accounts belong to customers, but says that coins in interest-bearing accounts belong to the company

Customers of Celsius’ custody programs have been awarded a $44 million repayment by the bankruptcy judge in charge of the case. US Bankruptcy Judge Martin Glenn this week ordered Celsius to return cryptocurrency that was separate from the lender’s interest-bearing accounts, although it represents only a tiny fraction of the billions of dollars Celsius owes users after its collapse in July.  

Judge Allows Release of Custody-only Coins

Celsius’ Custody and Withhold Accounts were simply crypto storage facilities offered by Celsius and didn’t include any options for earning interest. Celsius filed a motion in September to allow customers with digital assets held in these accounts to be withdrawn, with both Celsius advisers and stakeholders on the other side coming to the conclusion that coins placed in these accounts belonged to users rather than Celsius.

In affirming the judgement to allow Custody and Withhold to recoup at least a portion of their funds, US Bankruptcy Judge Martin Glenn said, “I want this case to move forward,” and that, “I want creditors to recover as much as they possibly can as soon as they possibly can.”

Celsius Says It Owns Coins in Interest-accruing Accounts

The issue over ownership of the rest of the cryptocurrency held by Celsius is more complicated, however. Celsius has more than $4.2 billion worth of assets in customer accounts when it collapsed, with $150 million having been moved from Earn accounts into custody accounts shortly before the bankruptcy.

Celsius is trying to claim that coins held in these interest-bearing accounts actually belong to them, and that because of rules surrounding so-called ‘preferential transfers’, any funds transferred from an interest-earning account into one of these custody-only accounts in the 90 days leading up to the bankruptcy also belonged to them.

Judge Glenn didn’t order the return of any of these disputed coins, unless the transfers were for less than about $7,500, which accounts for a little more than $11 million of the customer deposits.