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Wednesday, November 30, 2022

Celsius Files To Reopen Withdrawals

Celsius has requested that owners get $50 million of the $225 million total that is now held in the Withhold Accounts and Custody Program.

The troubled Celsius Network, a cryptocurrency lender, yesterday filed a request with the U.S. Bankruptcy Court to permit clients who have digital assets in specific accounts to withdraw them.

Celsius: The Catch

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The motion is only going to be applicable to Withhold and Custody Accounts and applicable to Custodial Assets valued at $7,575 or less, so there is a catch. Custody and Withhold Accounts from Celsius, which effectively act as wallets for storage, are designed such that they will still allow customers to retain legal ownership over their bitcoin.

However, this ownership does not apply to assets maintained when it comes to accounts that provide borrowing or yearly crypto earnings (Earn and Borrow accounts).

While creditors are pleased that Celsius Network has acknowledged that money kept in its “Custody Program and Withhold Accounts likely do represent the property of their estates,” the community’s reaction to the move has been divided.

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The community, according to CEO of BnkToTheFuture.com Simon Dixon, feels Celsius has a desire to release considerably less money than is fair.

Only $50 million out of the $210 mil held amongst 58,300 customers in custody accounts is anticipated to have a release, according to Dixon, and the sum excludes all monies over $7,575 that were moved from the Earn Program and Borrow Program into Custody and Withhold accounts. The “statutory ceiling” of $7,575 is the amount below which Celsius may not refuse to transfer cash in accordance with section 547(c)(9) of the Bankruptcy Code.

The attorneys have made a distinction between “Pure Custody/Withhold Assets” and “Moved Custody/Withhold Assets” in order to get to that $50 million number, with “Pure” assets being those that remained un-transferred from the Earn or Borrow Programs. The community members have not been pleased with this financial distribution.

Numerous members of the community have stated that they want, at least, all of their money refunded in reaction to a Friday tweet from Celsius.

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