Celsius Wants to Unfreeze $225M in Customer Funds

Key takeaway

  • Celsius filed a motion today asking for permission to unlock a number of customer accounts.
  • The cryptocurrency lending platform said the funds stored in its custody program and withholding accounts were not actually owned by the company.
  • At August 29 prices, the custody program held approximately $ 210 million in funds, while withholding tax accounts had $ 15 million.

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Bankrupt crypto lending company Celsius is looking to return client funds held in its custody program and hold accounts, claiming that they technically do not belong to the company itself.

Return of $ 225 million

Some Celsius customers may soon get some relief.

In the latest chapter of the bankruptcy procedure of Celsius, the cryptocurrency lending company asked today for permission from the courts to release funds from selected clients.

In the statement, Celsius argues that the digital assets held in its custody program and withholding accounts do not actually belong to Celsius by law and that as a result it would be “fair and appropriate” for customers to be able to withdraw these funds. As of August 29, these assets were worth approximately $ 210 million in custody and $ 15 million in savings accounts. The first amount is made up of the deposits of approximately 58,300 customers and the second of approximately 5,680.

A hearing has been scheduled for October 6 at 10:00 EST by the New York Southern District Bankruptcy Court to discuss the matter and eventually authorize the motion.

Celsius is a “CeFi” company, which is a centralized entity that aims to exploit the return opportunities found in decentralized finance (DeFi) protocols on behalf of its customers. Once one of the leading lending companies in the cryptocurrency industry, Celsius paused customer withdrawals in June, citing “extreme market conditions”. The company filed for Chapter 11 bankruptcy a month later, revealing it suffered from a $ 1.2 billion hole in its balance sheet.

The filing for bankruptcy sparked protests from the company’s customers, some of them claimed on social media that they have lost their life savings for the company. The scrutiny imposed on Celsius since its filing for bankruptcy has also led to reports that the company’s CEO Alex Mashinsky had previously been directionally business Bitcoin with client funds against the advice of the company’s senior traders.

Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.

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