Celsius facing legal action by aggrieved custody customers over $180M deposit
Celsius faces a lawsuit from a group of custody clients seeking the return of a $180 million deposit.
A growing group of 400 customers own approximately 4% of total assets locked in the Celsius network, or $180 million. To pursue legal action, the group utilized the following services: Kyle J. Ortiz, partner at restructuring firm Togut, Segal & Segal LLP.
David Little, one of the group’s organizers, said the legal move has received the utmost support from affected customers, as everyone has signed the contract.
Regarding the group’s responsiveness, David said:
“Our group grew from a few people to about 400 people in a matter of days and raised $100,000 from a group of talented strangers.”
Affected customers have lost faith in Kirkland & Ellis, the law firm acting on behalf of Celsius, so they funded their attorneys and sought reimbursement. They argued that law firms were trying to protect their interests with little effort to return their clients’ funds.
Celsius Charges for User Funds
lawyer Kirkland & Ellteethwhile representing Celsius in the first bankruptcy hearing On July 18, it claimed that users waived their legal rights to crypto assets when they agreed to the terms of service.
Customers using Celsius acquisition program Transferred the ownership of the coin to the company. As a result, “Celsius owned the keys, so they owned the coins,” so they could use, sell, pawn and reset them at will. Customers earned interest on their deposits but lost control of their assets.
Attorney David Silver commented in a tweet:
11) Celsius says that no one in the EARN program has a cipher that belongs to them (i.e. stop thinking of it as *your* cipher). Celsius is the owner of crypto assets. Most of Celsius’ assets are offered through his EARN program and are part of the estate.
— David Silver (SILVER MILLER) (@dcsilver) July 18, 2022
Customers with custody programs continued to retain ownership of their assets, but were not entitled to interest. Celsius argued that holding a custody account does not guarantee that funds can be recovered if the user faces bankruptcy.
