According to a recent court filing, a group of bankrupt Celsius Network’s creditors is seeking to recover a total of more than $22.5 million worth of cryptocurrency assets collectively held in Celsius’ custody service.
The U.S. Bankruptcy Court for the Southern District of New York received a complaint from an ad hoc group of 64 Celsius custodial account holders seeking the return of their funds.
The filing states that the group’s cryptocurrency is not deposited in the yield-generating “Earn” program, but rather in custodian accounts. According to the petition, this means that Celsius should have kept the money in segregated storage on behalf of the group’s members, who still have ownership of the money.
The statement asserts that as a result, the customers ought to be entitled to get their money back regardless of how the bankruptcy case turns out.
According to the plaintiffs, Celsius has not honored any withdrawals from any programs, including custody services. This is in violation of the clear language of the debtors’ terms of use, which state that title of custody assets always remains with the user.
The right to any digital assets in Celsius’ custodial wallet shall at all times remain with clients, per the company’s terms of usage, and not be given to Celsius.
The statement reads “Celsius will not transfer, sell, loan or otherwise rehypothecate eligible digital assets held in a custody wallet unless specifically instructed by you, except as required by valid court order, competent regulatory agency, government agency, or applicable law.”
This ad hoc group’s formation has taken multiple weeks. On September 1st, there will be a hearing at the New York court to go over the complaint.
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