Celsius Network Ltd., the bankrupt cryptocurrency lender, is attempting to return coins to a small number of users who have been locked out of their accounts.
The company requested permission from a US bankruptcy judge to release approximately $50 million in cryptocurrency held on the platform in so-called custody accounts, which are designed to store digital assets rather than generate returns. According to court documents, a full hearing on the request is scheduled for October 6.
The move reflects a major split among the many thousands of users who were harmed by the company’s bankruptcy. According to the company, those who deposited cryptocurrency intending to earn interest on their holdings signed over ownership of the coins to Celsius, whereas those who only stored their assets on the platform technically retained title to the coins.
Celsius’s request for $50 million is only a fraction of the more than $200 million trapped in custody accounts on the platform. This is because many users transferred their holdings from interest-bearing accounts to custody arrangements shortly before the bankruptcy, which may allow Celsius to assert ownership over the coins, according to a lawyer for Celsius at a Thursday hearing.
The custody accounts represent only a small portion of the crypto users who have not recovered from Celsius. According to court documents, the market value of assets in so-called earn accounts was around $4.2 billion as of July 10.
Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York, is the name of the bankruptcy case (Manhattan).
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