My Crypto’s Gone: Cryptocurrency in Earn Accounts Belong to Celsius not Customers

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Cryptocurrency in Celsius’ Earn Accounts belongs to the bankruptcy estate, and not to the depositors who placed it there, according to a January 4 memorandum opinion from Judge Martin Glenn of the U.S. Bankruptcy Court in the Southern District of New York.

The decision is a blow to the individual customers who deposited crypto assets into roughly 600,000 “Earn” accounts (the “Earn Accounts”) maintained by Celsius Network LLC and its affiliates (the “Debtors”). Shortly before the Celsius Debtors filed bankruptcy in July 2022, the Earn accounts contained crypto valued at approximately $4.2 billion. The Debtors froze withdrawals from the Earn Accounts in advance of the filing, and the bankruptcy stay prevents withdrawals after filing. Now, Earn Account customers who had hoped for a full return of their cryptocurrency are left holding general unsecured claims and are potentially facing a steep loss.

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