Celsius Files to Resume Withdrawals for Select Customers

Celsius Network, a troubled cryptocurrency lender is applying for bankruptcy protection. A small number of customers are now able to withdraw their digital assets after the court approves.

The crypto lender filed a Thursday motion with the United States Bankruptcy Court of the Southern District of New York asking for customers’ assets in its Custody program and Withhold Accounts be released to their owners.

Celsius will release $50M worth assets to users

The motion seeks the release of approximately $50 million from the more than $225 million in Custody Programs and Withhold Accounts, only to those users whose assets have always been in these account types.

Celsius’ Custody Accounts and Withhold Accounts were designed to be storage wallets that allowed users to retain legal ownership of the cryptocurrencies they store. The policy does not apply to users who have assets in accounts that provide annual crypto earnings or borrowing service, such as the Earn and Borrow accounts.

Users who have transferred assets to Custody/Withhold accounts prior to the company’s collapse will not be eligible for the next withdrawal. The crypto lender has divided the assets in these accounts into “Pure Custody/Withhold Assets”, and “Transferred Custody/Withhold Assets.”

According to the firm’s lawyers, “pure assets” refers to cryptocurrencies not transferred from the Earn and Borrow Programs. Customers who have transferred assets to the Custody Program from Celsius accounts within 90 days of the company’s bankruptcy filing will not be eligible for withdrawal if the motion is approved.

The debate about which digital assets customers own and are part of the company’s estate in bankruptcy proceedings has a major impact on Celsius’s ability to segregate account holders who may be able recover their funds.

The firm’s legal team argued that customers had transferred ownership of digital currencies to the crypto lender after they made deposits on the platform. Celsius controls almost 80% of funds on the platform, as most assets are in Earn and Borrow accounts.

The First Step Forward

In its filing, the company admitted that customers wouldn’t likely support the new arrangement. However, the crypto lender pointed out that this is only one step in its efforts to help customers get their money back.

“The relief requested in this motion may be opposed by all customers or stakeholders, and it may not go as far some Custody Program customers may desire and Withhold Account holders may not wish. The filing states that this motion is a step towards, but not the final word, efforts to return assets customers where possible, without jeopardizing Debtors’ efforts maximize value and distribute it to all customers as fairly and fairly as possible.”

Celsius had more than $11 billion in assets under management as of mid-May (AUM). The company, however, stopped all withdrawals in June due to extreme market conditions. Celsius currently faces several lawsuits, one of which is a fraud case brought by its former money manager.

The United States Bankruptcy Court has set Oct. 6 as the hearing for the proposed motion.

CryptoPotato’s first post, Celsius Files to Withdraw Resumes for Select Customers, appeared first on CryptoPotato.

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