Cryptocurrency in Celsius’ Earn Accounts belongs to the bankruptcy estate, and not to the depositors who placed it there, according to a January 4 memorandum opinion from Judge Martin Glenn of the U.S. Bankruptcy Court in the Southern District of New York.
The decision is a blow to the individual customers who deposited crypto assets into roughly 600,000 “Earn†accounts (the “Earn Accountsâ€) maintained by Celsius Network LLC and its affiliates (the “Debtorsâ€). Shortly before the Celsius Debtors filed bankruptcy in July 2022, the Earn accounts contained crypto valued at approximately $4.2 billion. The Debtors froze withdrawals from the Earn Accounts in advance of the filing, and the bankruptcy stay prevents withdrawals after filing. Now, Earn Account customers who had hoped for a full return of their cryptocurrency are left holding general unsecured claims and are potentially facing a steep loss.
