Certain custody accounts on bankrupt crypto lender Celsius have successfully initiated withdrawals on the platform.
On Mar. 2, Celsius opened withdrawals for eligible custody accounts based in the U.S.
Users who held their crypto in “pure” custody accounts, meaning they never held their assets in Celsius’ Earn or Borrow programs, were entitled to a withdrawal without a cap. Those that transferred their funds into a custody account from an Earn/Borrow account in the three months leading up to Celsius’ Chapter 11 filing won’t be able to withdraw more than $7,575.
Some users with relatively low balances in these accounts reported being able to recover the entirety of their funds, which had been locked on the platform for 263 days.
Glad to be one of the few to get their money back in almost one piece. Hoping everyone else will receive theirs in due time 💯
— richieroyce.eth (@Richie_Royce) March 2, 2023
Eligible users reportedly received an email from Celsius a few weeks prior notifying them of the event, and another email on Thursday confirming they could initiate withdrawals. According to the email, transaction fees would be applied to all withdrawals processed.
Today I received this email from #Celsius that my eligible Custody was now available for w/drawal. I successfully initiated a w/drawal. There were some new Travel Rule options I has to certify in the process. Also, I was required to submit a video confirmation of my request.👍 pic.twitter.com/jlkKP5RRQS
— CryptoCexual (@jamers2012) March 2, 2023
While some have finally been given access to their funds, a more concerning development for larger creditors is the potential implementation of clawbacks under the new deal with NovaWulf.
BREAKING: Retail clawbacks might be enforced for every Celsian who withdrew more than $100,000 in the last 90 days before the pause. pic.twitter.com/LneIcvaoIS
— Celsians (@CelsiansNetwork) March 1, 2023
“I have 30k stuck on Celsius, under the plan for NewCo, since I took out 106k in May 2022, I will owe another 29k in a clawback… nearly 50% of my life savings will be gone because of Celsius,” tweeted one user.
Worse still for Celsius creditors, the clawback provisions are applicable to them even if they deposited more during the 90-day period than they withdrew from the platform.
More bad news for @CelsiusNetwork network creditors. Heard back from my K&E email:
“I can confirm that the withdrawal amount consists only of withdrawals and does not take into account deposits.”
— Rob Christiansen (@robchristiansen) March 2, 2023
Celsius’ lawyers claim they have calculated and treated the preference claims in accordance with the bankruptcy code, but many in the crypto community are not buying it.
“Clawing back people who deposited more than they withdrew is plainly and simply theft. That is something none should agree with. There is simply no justification,” said one user.