- Bankrupt crypto lender Celsius has motioned the New York bankruptcy court to allow users to withdraw money from Custody Program and Withhold Accounts
- Out of the total $225 million in Custody and Withhold accounts, only $50 million are eligible for release
- The price of Celsius’ native token CEL rallied 25% following the news
Celsius filed a motion with the New York bankruptcy court to release $50M in digital assets to users
Celsius, a centralized crypto lender that filed for bankruptcy in July, has filed a motion with the United States Bankruptcy Court for the Southern District of New York that would see certain customers gain access to digital holdings they had deposited on the Celsius platform.
Recall that in June, then-strapped for cash crypto lender froze user withdrawals to prevent a substantial outflow of funds that could prevent the company from undergoing a comprehensive restructuring. At the time, Celsius said the move was necessary to protect users, creditors, and the company itself.
Now, roughly three months after the initial debacle, Celsius is trying to make good on at least a part of the funds its customers are owed. While Celsius legally exercises ownership over funds deposited in Earn and Borrow accounts (accounts that facilitate crypto earning and borrowing services), the funds in Custody Program and Withhold accounts are likely legally owned by users.
As of September 1, the total amount of funds deposited in Custody accounts is $210 million, according to the court filing. Approximately 58,300 users have the claim over said funds. In addition, about 5000 users hold assets in Withold accounts, worth roughly $15 million.
However, out of the total amount, only about $50 million has been made eligible for distribution, according to prominent Bitcoin investor Simon Dixon.
Per Dixon, Celsius claims that funds moved to Custody 90 days before the court filing “should be withheld.” The remainder of funds, Dixon believes, is being retained for clawbacks.
While the move by Celsius has received mixed reactions from the broader crypto community, investors apparently saw the move as a bullish sign – the project’s native cryptocurrency, CEL, rallied by 25% to $1.51 in the last 24 hours. The token is still trading far beneath its ATH of $8.01 the token reached last June.
David is a crypto enthusiast and an expert in personal finance. He has created numerous publications for different platforms. He loves to explore new things, and that’s how he discovered blockchain in the first place.