• On January 4th, 2023, a U.S. Bankruptcy Court ruled that the $4.2 billion of assets locked in Celsius Network LLC’s Earn program belonged to the now bankrupt lending platform and not its clients.
• The 42-page ruling stated that, when users invested their funds into the Earn program, they accepted binding terms and conditions which transferred ownership of the funds to the platform immediately.
• This ruling has a massive bearing on the customers of the CeFi protocol, as they now look to the firm to reimburse their assets following the Chapter 11 bankruptcy filing from mid-July 2022.
On Wednesday, January 4th, 2023, a U.S. Bankruptcy Court for the Southern District of New York ruled that the $4.2 billion of assets that had been locked in Celsius Network LLC’s Earn program belonged to the now bankrupt lending platform and not its clients. This judgment will have a massive bearing on the customers of the CeFi protocol, as they now look to the firm to reimburse their assets following the Chapter 11 bankruptcy filing from mid-July 2022.
The 42-page verdict was shared on Wednesday and was issued by Chief Judge Martin Glenn of the U.S. Bankruptcy Court. The judge referred to the fine print and cited the binding investment contract issue governed by New York law that effectively transferred ownership to the now-bankrupt platform immediately when funds were locked in their earn account. According to the evidence presented by Celsius‘ lawyers, it was determined that „99.86% of the Earn Account holders accepted Terms Version 6 or a later version“. The court also added that the language used by Celsius in their Terms and Conditions was „unambiguous“, qualifying debtors‘ arguments as inadmissible. By accepting binding terms presented by Celsius, users gave the bankrupt lending platform „all rights and title to such Eligible Digital Assets, including ownership rights“.
Ultimately, the ruling of the U.S. Bankruptcy Court will have a great impact on the customers of the CeFi protocol, as they now look to the firm to reimburse their assets. The customers of the CeFi platform had been waiting for an answer to their claims for months, and this ruling will now give them a sense of closure. For Celsius, this ruling could mean a new start, as the company now has control over the $4.2 billion of assets locked in their Earn program.