Celsius Network is since July 14 under Chapter 11 protection in the New York Bankruptcy Court.
Withdrawals only available to celsius clients of Custody Program
The Celsius platform has filed a petition with the court to refund some of its users. If the request is granted, $50 million would be returned to their original owners. However, this only affects customers who deposited assets with Celsius in non-speculative accounts.
This step follows the sudden suspension of all withdrawals in early June, itself a consequence of the collapse of the TERRA-LUNA ecosystem. Today we learn that aggrieved customers may be able to recover some of their funds in bitcoin and other crypto assets, under certain conditions.
However, the option will only be available to clients who were using the Custody Program and Withhold Accounts services, and whose balance did not exceed $7,575. Earn and Borrow services will not be affected by this transaction.
This specific amount of $7,575 is not a coincidence. It is in fact the legal limit below which a bankrupt company is required to make restitution of assets under applicable U.S. bankruptcy law.
According to the document, the freezing of Custody Program and Withhold Accounts funds would affect 58,300 users.
No details of the timetable or technical procedure for the recovery of funds frozen by customers have yet been disclosed.
The motion comes after Celsius customers with deposit accounts at the company requested that their funds be returned to them independently of the bankruptcy proceedings. The court filing states:
The Debtors have identified significant cryptocurrency assets that they believe are not property of their estate and for which the Debtors do not believe they have cognizable causes of action under applicable law. Accordingly, the Debtors believe that it is fair and appropriate to allow customers to withdraw these cryptocurrency assets at this time.