Cryptocurrency lender Celsius Network, which entered into Chapter 11 bankruptcy proceedings in July, said on Sept. 1 that it wants to return client assets in its custody program and withhold accounts worth about $210 million. filing.
According to the filing, as of August 27, approximately 15,680 Celsius users hold “Pure Custody Assets” worth approximately $43.87 million. As of August 31, another 22,580 of his users held “Transferred Custody Assets” worth about $11.25 million, the company said in a filing.
Additionally, according to the application, 5,000 Celsius users have approximately $15.33 million worth of assets in their Withold accounts.
According to the filing, Celsius’ analysis determined that these assets were part of the client’s estate and did not belong to the bankruptcy estate. Celsius has therefore petitioned the court to allow eligible customers to withdraw such assets from the platform.
The New York Bankruptcy Court for the Southern District has set a hearing on this petition for October 6.
In its filings, Celsius claimed that the assets of the Earn and Borrow program were real estate assets. For example, if a customer has an outstanding loan under a borrowing program, the assets in the user’s custody or withholding account may act as collateral and are therefore property of the real estate. The company said in a filing that it would not unfreeze the accounts of such users.
Celsius further said it is not seeking to return custody or withholding assets to current or former employees or employees of affiliated companies.
The Celsius creditors committee has yet to give full approval to the proposal, but the company said the committee “generally supports the release of the related crypto assets,” according to the filing.
Celsius’ filing comes a day after a group of creditors filed a lawsuit against the company seeking repayment of approximately $22.5 million in its custody accounts.
In its latest filing, the company added that some customers may be disappointed with the current offering, but that:
“It is the first step towards an effort to return assets to customers as much as possible without jeopardizing the debtor’s efforts to maximize value and distribute that value as equitably to all customers as possible, Not the last word.”
Celsius Bankruptcy Story
Celsius Network was one of the first crypto lenders to suspend withdrawals and transfers on its platform in early June. A series of lenders soon followed. Celsius filed for bankruptcy in July, while other lenders began their own restructuring processes or sought bankruptcy protection to buy time to return their customers’ funds.
According to the application, Celsius had more than 1.7 million registered users, of which about 300,000 were active users with a balance of $100 or more.
Since filing for bankruptcy, Celsius has repeatedly run into customers. In early August, a group of 400 Celsius users demanded his $180 million return in the Celsius custody program.
Soon after, unsecured creditors of Celsius, a group representing the interests of its users, claimed that Celsius CEO Alex Mashinsky had misled customers by assuring them that their funds were “safe”. This led to the suspension of withdrawals.