The U.S. bankruptcy judge responsible for the Celsius Network case has ordered the bankrupt crypto lender to return around $44 million worth of cryptocurrencies.
According to Bloomberg, the ruling by Judge Martin Glenn will impact customer funds that never touched the firm’s flagship interest-bearing lending service, which represents a fairly small minority of the overall customer funds held by Celsius.
According to a recent court filing, around 58,300 "Custody Customers" held assets worth $210.02 million in the company's wallets.
Celsius Customers Have Until January to File Claims in Bankruptcy Proceedings
The U.S. Bankruptcy Court of the Southern District of New York has approved a request by bankrupt crypto lender Celsius to set a deadline for its customers to submit proofs of claim in the ongoing bankruptcy proceedings. “The bankruptcy court approved our motion to set the bar date, which is the deadline for all customers to file a claim. The bar date has been set for January 3, 2023,” Celsius wrote in a Twitter post Sunday. According to Celsius, the firm’s claims agent Stretto is going to notif...
There were just 15,680 customers, however, who held around $43.87 million in what’s known as “Pure Custody” the entire time. It is this latter group that will see 100% funds returned, as per the bankruptcy court judge.
“Pure custody” would include users Celsius’s Custody and Withold Accounts, which effectively acted as crypto wallets.
But it is only users who held their funds in “Pure Custody” the entire time that will get 100% of their capital back due to rules around “preferential transfers.”
Customers that transferred from Celsius’ interest-bearing services into “Pure Custody” after the firm’s many financial issues became apparent, a period which the filing determines as 90 days before the firm declared bankruptcy on July 13, are only set for a return of capital up to a value of $7,575.
The above condition is set to impact around $11 million of crypto, according to the filing.
Users impacted by the demise of Celsius, who kept money in any of the services they offered, have until January 3 to file their claim, as per an announcement by the company.
The latest development in the high-profile court case comes after the lender became one of the most high-profile victims of the crypto winter after it slid into Chapter 11 Bankruptcy in July, reporting an almost $1.2 billion black hole in its balance sheet.
Celsius bankruptcy auction
Alongside today's news, other industry bidders are busy snapping up what’s left of Celsius’ remaining assets.
Earlier this week, famed American investor Mike Novogratz’s Galaxy Digital won a bid to acquire GK8, a self-custody crypto firm that has been acquired by Celsius in 2021.
Though the amount paid was undisclosed, it was reportedly much lower than the $115 million it was originally acquired for in November 2021.
Editor's note: This was article was updated to clarify that 58,300 Celsius users held assets in Custody accounts, not in the Earn Program or Borrow Program, according to a court filing.
