Celsius Network may return $44,000,000 to custodial wallet owners

Representatives of the Bloomberg publication claim that the Celsius Network, which crashed, will return to the owners of custodial wallets about $43,870,000 in cryptocurrency equivalents. The US Bankruptcy Court responded to the request of a group of individuals who previously served in a cryptocurrency lending company and had custodial wallets.

Such wallets imply that the owners of the company have access to customer funds, since they have the necessary keys from the wallets of exchange users.

The document, which is before the bankruptcy court in the United States, says that at the end of August 2022, Celsius had about 58,300 customers who deposited more than $210,000,000 on the exchange. Of these funds, $43,870,000+ was sent to custodial accounts. Such a prudent move was made by 15,680 site users. During the consideration of the case, the judges ordered the owners of Celsius Network to return the funds that were on these accounts.

The main difference between these 15,680 users and the bulk of customers is the ownership of the money they invest. The rest of the people used the “predominant” functions of the platform for earning in the form of Earn and Borrow, which took money from them to conduct transactions with loans and lending.

The main "feature" of the Celsius Network in the form of earning on Earn & Borrow was expected to be a trap for customers

It is noteworthy that another 22,580 clients can achieve a happy ending in this story. The reason for this was the timely withdrawal of their funds from Earn and Borrow accounts to custodial wallets before Celsius Network representatives filed for bankruptcy. In total, such prudent users have withdrawn assets totaling $11,250,000. Soon, the judges will oblige the owners of the bankrupt platform to return the money to those customers.

Despite the foreseeable possibility of returning customers their funds, the platform still has the right to claim ownership of the money, as indicated by the set of rules associated with “preferred transfers”. This rule does not apply only to a small amount that does not exceed $7,500.

Over the summer, Celsius Network started having problems. On June 13, the administration of the cryptocurrency lender closed access to the withdrawal of funds, as well as the exchange of money and their transfers between user accounts. Celsius filed for bankruptcy a month later. The plan for the procedure for the sale of Celsius Network assets was approved by the court in October, and a couple of months later, the top management of the cryptocurrency lender filed an application with the court to approve the sale of the stablecoin. He explained this to provide operational liquidity so that money transactions can be carried out without difficulty.