Judge Rules $4.2B Belongs to Celsius, Not Account Holders

• Judge Martin Glenn ruled that the funds deposited to Earn Accounts, which amount to $4.2 billion, are the property of Celsius, not the investors.
• Celsius had around 600,000 accounts in its Earn program when the account holders filed the lawsuit.
• Celsius had secured an extension for submitting a chapter 11 reorganization plan on Dec. 6, 2022, with a deadline of Feb. 15, 2023.

The Celsius bankruptcy case took a new turn on Jan. 4, as Judge Martin Glenn ruled that the funds deposited to Earn Accounts, totaling $4.2 billion, belong to Celsius, not the investors. This was a result of the account holders filing a lawsuit against the company.

Celsius had around 600,000 accounts in its Earn program when the lawsuit was filed. The account holders argued that they were entitled to their funds and requested full returns. Judge Glenn’s ruling, however, ties their recovery to the distributions to unsecured creditors under a confirmed chapter 11 plan.

Celsius was granted an extension for submitting a chapter 11 reorganization plan on Dec. 6, 2022. This plan would have to detail how the company plans to maximize profit for all creditors and stakeholders by the deadline of Feb. 15, 2023.

The ruling document states, “The Court concludes, based on Celsius’s unambiguous Terms of Use, and subject to any reserved defenses, that when the cryptocurrency assets (including stablecoins, discussed in detail below) were deposited in Earn Accounts, the cryptocurrency assets became Celsius’s property; and the cryptocurrency assets remaining in the Earn Accounts on the Petition Date became property of the Debtors’ bankruptcy estates (the “Estates”).”

With this ruling, Judge Glenn has given an answer to the account holders‘ claims that the funds belonged to them. The decision ties their recovery to the distributions to unsecured creditors under a confirmed chapter 11 plan, which will be submitted by the company by the set deadline.