A federal court will soon rule on whether Celsius Network LLC depositors willingly relinquished ownership of their cryptocurrency in return for interest payments. This critical legal question might reverberate through other cryptocurrency bankruptcies.
Celsius has filed a petition with US Bankruptcy Judge Martin Glenn asking for permission to liquidate $18 million worth of crypto held by the company. At the same time, it figures out a means to repay creditors. Customers of Celsius put the coins in question into interest-bearing accounts before the company’s Chapter 11 bankruptcy filing in July.
That means Glenn will have to determine whether the cryptocurrency in the company’s interest-bearing accounts belongs to Celsius or its depositors. Glenn said in court on Monday that the issue is essential to the result of the bankruptcy because it will let prospective bidders understand precisely what they’re getting.
Given Celsius’s increasing legal expenditures, he says he must decide on the matter quickly, or there will be a corpse left. Glenn said he would probably not rule on the subject until at least next week.
According to Celsius’s advisers, customers gave away ownership of coins deposited in interest-bearing accounts when they accepted the company’s terms of service. Some creditors and a coalition of US state attorneys general contended Monday that the terms of service were vague and had altered over time.
Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York, is the bankruptcy (Manhattan).
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