A U.S. judge has ruled that a majority of customer deposits are the property of bankrupt crypto lender Celsius.
In a hearing on Wednesday, Bankruptcy Judge Martin Glenn ruled that cryptocurrency deposits in interest-bearing Earn Accounts were the property of Celsius and not users based on the platform’s “unambiguous Terms of Use.”
The ruling declared that cryptocurrency in these accounts amounted to a value of $4.2 billion as of July 10.
Judge Glenn referenced the provisions in terms, which were governed by contract law in New York, stipulating that Celsius holds “all right and title to such Eligible Digital Assets, including ownership rights.”
By signing the terms of use, 600,000 Celsius users essentially signed away their rights to ownership over crypto assets held on the platform.
One of the more immediate consequences of this ruling is the $23 million worth of stablecoins in these Earn Accounts, which Celsius is now free to sell at its discretion. Celsius sought permission to sell $18 million worth of stablecoins to generate liquidity and Wednesday’s ruling has granted them those rights.
The bankrupt crypto lender said that additional liquidity will be needed by early 2023, meaning that this stablecoin sale may come in the near future.
“The Court does not take lightly the consequences of this decision on ordinary individuals, many of whom deposited significant savings into the Celsius platform,” stated Glenn in the ruling.
“Creditors will have every opportunity to have a full hearing on the merits of these arguments during the claims resolution process,” he added.
