Celsius Network is returning a fraction of user funds back
The firm has filed to return 22%, nearly $48 million worth of assets back to their users.
In the filing filed with New York Bankruptcy Court, the troubled crypto lender stated that it seeks to return 22% of the funds to its users, which amount to nearly $48 million by reopening its withdrawals for a brief amount of time.
Celsius Network Is Returning Funds To Its Users.
Celsius Network, the embattled crypto lender has filed another court filing with the US bankruptcy court. Per the new filing, the troubled crypto lender platform seeks permission to release $48 million worth of funds that are locked in the firm’s custody accounts. These custody accounts were designed by the firm to act as storage wallets rather than wallets that accrue returns. Per the official court documents, the hearing for the same is scheduled to be conducted on October 6.
Celsius had also filed for bankruptcy protection in July, a month after the firm halted all transactions on its platform citing “extreme market conditions ” It is to be noted that the filing comes a day after a group of 64 users wrote a petition to the court asking Celsius to release nearly $25 million worth of their funds back.
The recent court filing argues that the customers who accessed the firm’s earn and borrow related services voluntarily signed the ownership of their funds to Celsius, while the customers who only deposited their funds with Celsius for storage purposes sort of retained the ownership of their funds under their name.
Even after releasing $48 million, Celsius Network will still be under a mountain of debt, with nearly $200 million of user funds locked in the platform “custody accounts. ” Per Bloomberg, “this is because the customers had shifted their holdings from their interest-bearing accounts into custody accounts shortly before the bankruptcy.”
The court documents further outline that the platform’s earned accounts possess nearly $4.2 billion worth of used funds as of July 10.
Launched in 2017, Celsius Network rose to prominence by delivering services as a crypto lending platform. The platform would facilitate crypto lending and borrowing by promising its users an attractive interest rate.
Headquartered in Hoboken, New Jersey, the firm went into hot waters the moment it paused its company withdrawals citing extreme market conditions. Celsius Network is currently in the process of restructuring and has hired Kirkland & Ellis LLP law firm to handle its court proceedings.