February 5, 2023

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Celsius, the bankrupt crypto lending company, is going through additional legal problems as the displeased consumers are making efforts to redeem their funds following the platform had frozen those assets in June. On Wednesday, a group of nearly sixty-four people who had their accounts on Celsius submitted a complaint under the Bankruptcy Court based in New York’s Southern District to redeem their assets.

Celsius Users Request the Court to Redeem their Crypto Worth of $22.5M

As mentioned within the court documents, several measures are being taken by the creditors to redeem a cumulative of above $22.5M in crypto assets kept in the custody service of the crypto lending firm. Togut, Segal & Segal (a law company focused on bankruptcy cases) is representing the group. It was noted by the plaintiffs that the venue has not given any permission to withdraw from any of its projects, taking into account the custody services.

As per the complaint, that opposes the terms of use specified by Celsius, saying that the consumers will always have the custody assets with them. As noted in the platform’s terms of use, the customers will constantly have the right not to transfer the assets – kept in the custody wallet of Celsius – to Celsius.

It adds that the company will not sell, transfer, rehypothecate, or loan the digital assets present within the custody wallet thereof unless the clients instruct them to do so or else ordered by a court, competent regulatory institutions, applicable law, or a government agency. The latest revision of Celsius’ terms of use was carried out in April this year, as noted by the firm.

The venue is included among several crypto lending companies that have gone through huge problems during the current bear market as well as the liquidity issues associated with the crypto lending zone during this time. A cumulative gap of up to $1.2B has been witnessed on Celsius’ balance sheet and the majority of the liabilities are owed to its customers.

Celsius Sues Prime Trust Amid Bankruptcy Proceedings

A request for protection under Chapter 11 bankruptcy in July. During the present liquidity and legal challenges faced by Celsius, the company submitted a legal suit against Prime Trust (prominent custody operating within the United States) in the latter part of August. The company alleged that the defendant remained unsuccessful in returning $17M in crypto in June previous year at the termination of its collaboration with the crypto lender.

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