One hearing about Celsius’s lengthy bankruptcy process has already sparked controversy regarding its restructuring plans and claims for user funds.
According to Kirkland and Ellisa law firm representing a company in bankruptcy proceedings, retail users transferred ownership of their Celsius coins when registering on the platform.
Lawyers argue that this gave the platform the right to use and re-pledge the coins, which drastically reduces Celsius’s liability for the loss of customer funds.
Celsius keys, Celsius coins
Celsius’ bankruptcy hearings officially began on July 18, setting off a long battle to restructure the company.
In the Southern District of New York, in the same court where Voyager filed for Chapter 11 bankruptcy, Celsius’s lawyers outlined the company’s case, causing quite a bit of controversy.
Celsius lawyers, led by Patt Nash of the law firm Kirkland & Ellis, believe that the outcome of the case depends on whether the court considers the cryptocurrencies held by Celsius to be owned by the platform or its users.
“Are crypto assets held by Celsius the property of the estate? Does the answer to this question differ for crypto assets stored under the “Storage” and “Earning” programs? What about crypto assets transferred to Celsius to secure institutional and retail loans?” presentation to court.
The company gave unequivocal answers to these questions later in the presentation.
Detailing the key segments of Celsius’ retail business, Nash noted that customers transferred ownership of their coins to the platform when they signed up for its Earn and Borrow programs.
The only retail product that allowed users to retain ownership of their coins was the custody program, which began in April 2022. The program was available to users worldwide, including non-accredited U.S. investors, and allowed the company to use the coins only as instructed by its customers.
Credit : cryptoslate.com