Bankruptcy Judge to Decide If Celsius or Clients Own Crypto

A federal judge will soon decide who owns cryptocurrency in interest-bearing accounts.

In the bankruptcy case of crypto lender Celsius Network, U.S. Bankruptcy Judge Martin Glenn will decide if crypto that was put into interest-bearing accounts before the firm’s filing for Chapter 11 in July belongs to the depositors or Celsius, Bloomberg reported Monday (Dec. 5).

Celsius has asked the judge for permission to sell the $18 million worth of crypto in order to keep paying its bills, according to the report.

Advisers to Celsius said the company’s terms of service told customers they were signing over the ownership of coins placed in the accounts, while some creditors said the terms were ambiguous and had changed over time, the report said.

Glenn said in court Monday that the status of the crypto will help potential bidders understand what they would be purchasing, per the report.

“I am going to go ahead and decide who it belongs to,” Glenn said. “The real issue is, how can we cut this enormous administrative expense and get to the goal line, to the exit?”

Glenn said it will be at least a week before he makes the decision.

The decision may impact the bankruptcy proceedings of other crypto lenders as well, the report said.

Celsius Network filed for Chapter 11 bankruptcy protection July 13, a month after it had frozen customer accounts.

As PYMNTS reported at the time, Celsius had become a big name in crypto lending by offering high returns while suggesting it was less risky than a regular bank.

But the company got into trouble by offering big yields to crypto depositors while making big loans that were backed by insufficient collateral. That left the company vulnerable to a market downturn.