Judge Rules That Assets in “Earn” Accounts Belong to Celsius

  • Judge Martin Glenn has ruled that Celsius’ terms of service made it clear it took possession of the assets held in its Earn accounts, which are worth over $4 billion.
  • The federal judge also decided to approve Celsius request to sale $18 million worth of stablecoins to fund its administrative costs.
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A federal judge has ruled that crypto assets held in Celsius’ interest-bearing Earn accounts belonged to the company as per its terms of service agreement, a court order said on 4 December.

According to the document, Judge Martin Glenn ruled in favour of Celsius over the more than $4 billion in assets held in its Earn accounts, pointing out that the company’s terms of service made it clear it took possession of such assets. As the terms state that Celsius held “all right and title to such Eligible Digital Assets, including ownership rights”, the bankruptcy judge noted that the issue of ownership was a “contract law issue”. Glenn wrote:

“The Court concludes, based on Celsius’s unambiguous Terms of Use, and subject to any reserved defenses, that when the cryptocurrency assets (including stablecoins, discussed in detail below) were deposited in Earn Accounts, the cryptocurrency assets became Celsius’s property; and the cryptocurrency assets remaining in the Earn Accounts on the Petition Date became property of the Debtors’ bankruptcy estates.”

The judge also decided to grant Celsius’ request to sell $18 million worth of stablecoins in order to fund its administrative costs for the next few months. Various regulators had objected to this request in September, but the judge explained that as the company had “established a good business reason”, and was in control of the Earn assets, he decided to grant the motion.

Troubled crypto lender Celsius filed for Chapter 11 bankruptcy back in July, and after six months it has returned only around $44 million of crypto assets to customers’ custodial accounts. In December, the company was granted an extension to come up with a viable Chapter 11 restructuring plan by 15 February 2023.

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