A United States court has ordered the bankrupt crypto company Celsius to refund its customers with crypto assets worth $44 million.
Judge Orders Crypto Returns
The crypto lender, which announced its bankruptcy in July 2022, has been ordered by the Chief Bankruptcy Judge Martin Glenn to return millions of dollars of crypto funds to its users. The firm has been directed to refund its users the crypto assets worth $44 dollars in September.
During the ruling, Judge Glenn reportedly stated,
“I want this case to move forward. I want creditors to recover as much as they possibly can as soon as they possibly can.”
In other news, the company has successfully appealed to the court to extend its exclusivity period till February 15, 2023, by which it has the monopoly to submit the company reorganization plans under the Chapter 11 guidelines. At the time of bankruptcy filing, the Celsius team had announced that its liabilities were between $1 billion and $10 billion, with over 100,000 creditors.
Escrow Funds Belong To Customers
A report claimed that Celsius held over $200 million in assets in escrow. However, the firm reportedly moved most of these funds (around $200,000) from interest-bearing to escrow accounts shortly before the bankruptcy filing. According to the preferential transfer rules, this could have given them the option to claim ownership of the funds in the custody accounts.
However, now according to the court order, the funds held in escrow accounts must also be returned to the customers, even if they did not enter the company’s interest-bearing accounts. The court order came after Celsius advisors and stakeholders determined that the funds held in the custody accounts belonged to the customers, not Celsius.
Executives More Eager To Fill Own Pockets
There has been quite some uncertainty regarding the funds held by Celsius, even after its bankruptcy filing. Several high-level executives were accused of filling their pockets instead of thinking about the community. Ex-CEO Alex Mashinsky has been a chief target of these allegations. In early October, reports broke that Mashinsky had withdrawn $10 million from the platform. Immediately after, Celsius froze all user accounts and transactions while still claiming that user funds were safe. Two other top executives were accused of allegedly stealing user funds a couple of days after this news broke. Former CSO Daniel Leon and CTO Nuke Goldstein reportedly withdrew $56 million along with Mashinsky just before the company filed for bankruptcy. The fact that all three top executives had put their own interests before the community has been a point of contention for the community and has led to a general feeling of ill will, especially towards the disgraced former CEO himself.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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