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Tuesday, May 30, 2023

US Bankruptcy Court Rules Celsius Deposits Belong to the Firm

US Bankruptcy Court Rules Celsius Deposits Belong to the Firm – A United States bankruptcy court has rendered a significant ruling in the ongoing dispute between Celsius, a former cryptocurrency lending company, and its customers over the ownership of deposits. A New York bankruptcy court judge, Martin Glenn, ruled in favor of the company, stating that it has the right over these funds, allowing it to harness the assets in any way, including lending, selling, and pledging these assets for investment purposes.

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On September 15, the company filed a request seeking permission to sell $23 million worth of stablecoins; this judgement clears the way for the company to carry out this operation. The ruling holds that Celsius’ terms of service, an agreement that all users must accept prior to being serviced by the company, was “unambiguous” in establishing the firm’s ownership of these deposited funds. The verdict could have implications for other instances involving companies that have filed for Chapter 11 bankruptcy protection, such as Blockfi and FTX.

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This decision affects 600,000 consumers of the lending company who participated in the Earn program that generated high interest on their accounts, which contained $4.2 billion in cryptocurrencies. These clients will now be categorized as unsecured creditors, which may affect the future magnitude and relevance of their claims. This will permit the company to use a portion of the funds to pay its Chapter 11 processes. Previously, prior to bankruptcy courts, the company had declared that it could only support its operations until March with its present funding.

The Celsius bankruptcy processes have also affected the privacy of its customers, as a filing detailing the usernames, transactions, and holdings of every user of the exchange was released in October. More than 18.6 gigabytes of data corresponding to more than 14,000 customers of the exchange were disclosed at the time, with the situation being qualified as one of the most “egregious privacy violations in crypto history,” according to some users.

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