Crypto lender Celsius is attempting to resume client withdrawals for a small number of customers after halting them in June and declaring bankruptcy in July.
According to a document Celsius filed on Thursday in the Bankruptcy Court for the Southern District of New York, the “Custody Program and Withhold Accounts” hold customer assets that are not the company’s property and should be accessible to customers.
In contrast to customers of its Earn or Borrow programs, the lending platform contends that customers of the custody program own their assets.
“The Debtors believe that assets in the Earn Program and the Borrow Program are likely property of their estates, and that the transfer of such assets to Custody Program or the Withhold Accounts would have been a transfer of the Debtors’ property to customers on account of such customers’ claims against the Debtors,” Celsius stated in the filing.
Celsius’s new decision will affect 58,300 users
According to the filing, as of August 29, approximately 58,300 users held “custody assets” worth about $210 million and approximately 5,000 users held “withhold assets” worth about $15 million. A hearing for the motion is scheduled for October 6, and the court will go over it then.
The complaint was submitted to the court a day earlier on behalf of a number of 64 its customers who were being represented by the bankruptcy-focused law firm Togut, Segal & Segal. Assets totaling more than $22.5 million were held in Celsius’s custody program, and the group sought to recover them.
Only a small portion of the firm’s total liabilities are comprised of assets held in the company’s custody program. Recent court documents revealed that Celsius has a $2.8 billion balance sheet hole as a result of its liabilities exceeding its assets by more than $6.7 billion.
Celsius Network was one of the several firms that were affected due to the fall of the Terra ecosystem and bear market.