Crypto lender Celsius, which has been dealing with bankruptcy proceedings for over a month, has sought to return some customer funds in a court filing on Thursday.
The beleaguered firm intends to return about $50M worth of assets in tokens belonging to the customers enrolled in the custody holdings program, which enabled crypto storage without generating any returns.
As per the filing, Celsius has about 58,300 such customers in the program, with deposits of approx $210 million. Of the custody accounts, about 15,680 hold “Pure Custody Assets” worth approx $44 million and 22,580 hold “Transferred Custody Assets” worth approx $11.25 million.
Celsius believes that the customers of the custody program are the owners of their assets, and the company was just providing storage services. In contrast, the customers who were enrolled in the “Earn” or “Borrow” products were investors expecting a return on their investments.
“The debtors have identified significant cryptocurrency assets that they do not believe are property of their estates, and as to which the debtors do not believe that they have any colorable causes of action under applicable law,” the filing stated. “Accordingly, the debtors believe it is fair and appropriate to permit customers to withdraw those cryptocurrency assets at this time.”
Celsius paused withdrawals in June and filed for Chapter 11 bankruptcy the next month. Since then, customers have written several letters to the court explaining their hardships and seeking some kind of settlement.
The Thursday filing comes after an organized group of 64 custody customers filed a petition the day before in the court requesting their funds of about $25 million to be returned.
According to them, Celsius had “not honored any withdrawals from any programs,” which contradicted the “plain language of the debtors’ terms of use.”
In the filing, Celsius expressed the desire to remain cautious while choosing which assets to return and to whom.
“Allowing customers to withdraw property that could be subject to later avoidance actions would be akin to choosing to drain a sink full of water, and then trying to collect the water after it had drained through the pipes,” wrote the lender.
The Bankruptcy Court has scheduled to hear the case on Oct 6.
Even if approved, the stated amount is minuscule to the total amount of funds Celsius owes to its customers – approx $210 million through the custody program and about $4 billion through its rewards program.
