Bankrupt cryptocurrency lender Celsius’ lawyers have asserted that the platform’s users gave up rights to the digital coins deposited in the borrow-and-earn programs.
What Happened: At the first bankruptcy hearing on July 18, Celsius legal counsel Kirkland & Ellis stated that customers had transferred their title to coins to Celsius under the e-Terms of Use (“TOUs”).
As such, the team of lawyers, led by Pat Nash, said Celsius is “entitled to use, sell, pledge and rehypothecate those coins.”
“Celsius lawyer just said what should make every Celsius user cringe: All the crypto is safe, Celsius has title to it, and Celsius will keep it for its own benefit until ordered otherwise,” said David. C Silver, founding partner of Silver Miller, in a Twitter thread breaking down the main events of the hearing.
7) Next - Celsius addressed custody accounts. Celsius claims a legal decision is needed because accounts may not be as titled/described. That was more marketing than truth (*my interpretation).
— David Silver (SILVER MILLER) (@dcsilver) July 18, 2022
Said differently: Our Terms of Use screw platform users. It's our money, not yours. pic.twitter.com/nnYNo20WDB
11) Celsius says that anyone in the EARN program has no crypto that belongs to them (i.e., stop thinking of it as *your* crypto). Celsius is the owner of the crypto assets. Most of the assets in Celsius came in through the EARN program and is part of the estate.
— David Silver (SILVER MILLER) (@dcsilver) July 18, 2022
The platform has 1.7 million registered users and over 300,000 active accounts with a balance of over $100,000. The firm’s $14.5 billion in cryptocurrency assets under management was down to just $1.75 billion in July. Of this, around $180 million are Celsius custody accounts — the return of these funds to customers will be determined by the judge’s ruling.
"The vast majority of our customers are going to be interested in riding out this crypto winter, remaining long crypto, having the opportunity to realise their recovery through an appreciation in the crypto macro environment," Celsius’s legal counsel said, as per Financial Times reporter Kadhim Shubber's tweets.
Price Action: The crypto market saw a 2.72% increase over the past 24 hours, reclaiming a $1 trillion market cap.
According to data from Benzinga Pro, Celsius’ native token Celsius(CRYPTO: CEL) was trading at $0.78, down 3.17% in 24 hours. Ethereum(CRYPTO: ETH) was trading at $1,536, up 8% and Bitcoin(CRYPTO: BTC) was trading at $22,000, gaining 2.75% over the same period.
Photo by FellowNeko on Shutterstock
