- Cryptocurrency owners who use Celsius’s Custody and Withhold Accounts are still permitted to do so.
- Celsius cannot refuse to transfer amounts below $7,575.
The United States Bankruptcy Court received a motion from cryptocurrency lender Celsius Network requesting permission for customers with digital assets housed in specific accounts to retrieve their funds.
There is a catch, the motion will only apply to Custodial and Withhold Accounts and for Custodial Assets valued at $7,575 or less. Users of Celsius’s Custody and Withhold Accounts can still legally own cryptocurrency because of the way those accounts were created.
Ownership Not Expanded to Earn and Borrow Accounts
However, this ownership is not extended to assets maintained in accounts that provide borrowing or annual crypto profits. While creditors are pleased that Celsius Network has acknowledged that money kept in its Custody Program and Withhold Accounts likely do represent the property of their estates, the community’s reaction to the move has been divided.
#Celsius currently stating that those that were moved to custody 90 days before filing should be withheld. Custody is now $210m & they want to release $50m. They want to reserve the rest for clawbacks. They believe all earn funds belong to #Celsius 🤮 OPINION This is illegal bank https://t.co/efGb3XPU2b
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 1, 2022
According to Simon Dixon, CEO of BnkToTheFuture.com, Only $50 million of the $210 million held by 58,300 users in custody accounts is expected to be released. All funds over $7,575 that were transferred from the Earn Program and Borrow Program into Custody and Withhold accounts are not included in the released amount.
As per section 547(c)(9) of the Bankruptcy Code, Celsius cannot refuse to transfer amounts below the $7,575 total, which is referred to as the statutory cap. Celsius attorneys have made a distinction between Pure Custody/Withhold Assets and Moved Custody/Withhold Assets to arrive at that $50 million number, with Pure assets being those that were not transferred from the Earn or Borrow Programs. This fund distribution has not been well received by the community.
As we continue to focus on maximizing value for all stakeholders, we want to share what we hope to be a positive first step towards meeting the expectations of our community and other important updates from our hearing today.
— Celsius (@CelsiusNetwork) September 1, 2022
Some Custody Program customers and holders of Withhold Accounts may not support the remedy sought in this motion, and it may not go as far as they would want as per the Celsius.
Recommended For You :
