Withdrawals Opened to Small Number of Celsius Customers
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Withdrawals Opened to Small Number of Celsius Customers

Created 1yr ago, last updated 1yr ago

U.S. users of the collapsed crypto lender who deposited funds in custody without the 20%-plus interest rate the firm offered are getting at least some of their money back.

Withdrawals Opened to Small Number of Celsius Customers

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Eligible customers of failed crypto lender Celsius Network have begun withdrawing $50 million worth of funds that have not been locked into the bankruptcy pool.

The fairly small group of customers who entrusted funds to Celsius without taking advantage of the interest-bearing Earn accounts — which claimed to offer annual returns of over 20% — were broken into two groups by the court.

The first was "pure" custody customers who had never been part of the Celsius Earn program. They can withdraw funds without limit.

The next group, which transferred funds from Earn to custody, can withdraw as much as $7,575 each — or up to 94% of their assets — as long as they meet certain conditions. Both types of accounts were available only to U.S. customers.

Notable among those conditions was not having an outstanding loan after Dec. 20, having sufficient funds to cover withdrawal fees and supplying acceptable identification for anti-money laundering law compliance.

Eligible customers were emailed beginning on March 2.

Not Your Funds

The 1.7 million Celsius Earn account customers discovered after withdrawals were frozen in June that their funds were considered the property of Celsius under the law. That not only meant their assets were part of a pool to be divided among creditors, they were at the back of the line among different classes of creditors.

The custody-only customers were at the front of the line, the bankruptcy court ruled in January.

Given the size of the $1.2 billion hole in Celsius Network's finances, which were described as "Ponzi-like" in the report, that likely means Earn customers with less than $5,000 in their accounts will get about 70% back.

The plight of Earn customers is despite explicit comments to the contrary by former Celsius CEO Alex Mashinsky.

In a blistering, Jan. 31 report, court-appointed examiner Shoba Pillay said Mashinsky "routinely told customers … that customer-deposited coins are your coins, not our coins … it's always your Bitcoin... Coins are returned to their owners even in the case of bankruptcy."

However, Chief U.S. Bankruptcy Judge Martin Glenn ruled earlier that month that:

"Based on Celsius's unambiguous terms of use ... when the cryptocurrency assets (including stablecoins) were deposited in Earn accounts, the cryptocurrency assets became Celsius's property."
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