Celsius Custodial Service Users File Petition To Get Funds BackSeptember 1, 2022
- Users who used Celsius’ custody service are petitioning the company to release their funds.
- 64 individuals are part of the filing, and they hold approximately $22.5 million in the custody service.
- Celsius is under a lot of pressure at the moment and has itself made a filing against KeyFi.
Celsius seems to be facing more woes, as a group of custodial account holders have petitioned the bankruptcy court to have their funds sent back. Over 60 of these account holders are asking for the funds to be sent back outside of the proceedings, adding more pressure to the financially beleaguered company.
The petition was sent to the New York Bankruptcy Court for the Southern District of New York on August 31. According to the filing, these 64 individuals hold approximately $22.5 million in the custody service of Celsius.
The plaintiffs are arguing that customers of the custody service should be able to receive their funds because the funds should have been held in different storage. This is as opposed to those funds from the Earn product that other creditors are seeking. They argue that the firm should be able to return those funds and honor its intentions to pay back these creditors.
The key argument is that in the Earn product, users grant Celsius “all rights and title” to the digital assets. However, the filing notes of the custody service,
“Unlike the Earn Program, title to cryptocurrency ‘held in custody shall’ at all times remain with the [user]’ and ‘Celsius will not transfer, sell, loan or otherwise rehypothecate’ digital assets in custody unless ‘specifically instructed by [users], except as required by valid court order, competent regulatory agency, government agency or applicable law.’”
No End to Celsius’ Woes
The drama unfolding in the Celsius Network saga has been ceaseless, and it has put immense pressure on the company. Celsius is trying to sustain its business with a mining operation, but it will have a lot to deal with until that bears fruit. The company spent $40 million on crypto mining facilities, which is expected to be profitable by January.
Celsius recently claimed that KeyFi stole millions in crypto and that KeyFi CEO Jason Stone embezzled the funds on several occasions. It is taking legal action against the company and Stone in an attempt to recover the assets.
Meanwhile, there have been reports of acquisitions, though nothing has come of this yet. Reuters reported in August that Ripple was interested in acquiring the company.
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