The beleaguered cryptocurrency lender Celsius Network filed a motion with the United States Bankruptcy Court yesterday to allow customer withdrawals with digital assets deposited in certain accounts.
However, there is a catch, since the motion will only apply to Custody and Retention accounts and to assets in custody with a value of USD 7,575 or less.
Celsius has structured its Escrow and Holding Accounts, which essentially serve as storage wallets, in a way that still allows users to maintain legal ownership of the cryptocurrency.
Nevertheless, this ownership does not extend to assets held in accounts offering annual cryptocurrency earnings or lending services (Earn and Borrow accounts).
Community response to the motion has been mixed; creditors are pleased that Celsius Network has admitted that funds held in its “Scheduled Custody and Holding Accounts are likely to constitute property of their estates.”
Nevertheless, As BnkToTheFuture.com CEO Simon Dixon tweeted, the community believes the amount Celsius wants to hand over is far below what is equitable.
#Celsius currently stating that those that were moved to custody 90 days before filing should be withheld. Custody is now $210m & they want to release $50m. They want to reserve the rest for clawbacks. They believe all earn funds belong to #Celsius OPINION This is illegal bank https://t.co/efGb3XPU2b
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 1, 2022
Celsius currently claims that those who were moved into custody 90 days prior to filing should be retained. The custody is now USD 210 million and they want to deliver USD 50 million. They want to reserve the rest for returns. They believe that all funds earned belong to Celsius. MY OPINION: This is an illegal bank.
As Dixon points out, only $50 million of the $210 million held by 58,300 users in custody accounts will be released, and all funds above $7,575 that were transferred from the Earn Program and the Borrow Program to the Custody and Retention accounts will not be released. include.
The amount of USD 7,575 is called the “legal limit” and Celsius cannot prevent the transfer of amounts less than this total at the request of creditors.in accordance with section 547(c)(9) of the Bankruptcy Code.
The document also mentions that Some 5,000 customers have an additional $15.33 million in held accounts as of Monday.
In arriving at that $50 million figure, Celsius’s lawyers have distinguished between “pure custody/retention assets” and “transferred custody/retention assets”; “pure” assets are those that were not transferred from the Earn or Borrow programs. This division of funds has not been well received by members of the community.
In response to a Friday post on Celsius’s Twitter account, Countless members of the community have made it known that they want nothing more than a return of all their funds.
Kirkland (your counsel) already asserted Custody assets are not the property of Celsius. Doing anything besides releasing those assets in full is a complete violation of your TOS, as is your creation of new tiers out of thin air like “Pure Custody” which has no legal standing.
— johnnyBuz (@jBuzMSC) September 1, 2022
Kirkland (your attorney) has already stated that the Custodia assets are not owned by Celsius. Doing anything short of handing over those assets in full is a complete violation of their terms of service, as is their creation of new levels out of thin air like “Pure Custody”, which has no legal standing.
Celsius states that the assets locked up in the Earn and Borrow programs are likely owned by their estates, and that transfers of these assets to Custody or Hold accounts are described as “a transfer of ownership from Debtors to clients.”
Inside the document, Celsius states that the “remedial action requested in this motion may not be supported by all customers or interested parties, and may not go as far as some Escrow Program customers and retained account holders may wish.”
He suggests the motion is simply a “first step forward, not the last word, in efforts to return assets to customers.”
A hearing on the motion will be held on October 6 and, as of today, users have had their assets locked on the platform for more than two months.
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