According to the firm’s lawyers, Celsius’ 1.7 million registered users in more than 100 countries have given up ownership of the cryptocurrencies they have deposited in their Earn and Loan accounts.
At Celsius’ first bankruptcy hearing on July 18, lawyers from the Kirkland law firm led by Pat Nash detailed How retail users with Earn and Loan accounts transfer the title of their coins to the firm based on their terms of service (ToS). As a result, Celsius is free to “use, sell, pawn and re-mortgage these coins as they see fit.”
However, a legal question has arisen as to whether Custodian account holders retain ownership of their assets. Celsius ToS claims that the firm cannot use funds in Storage accounts without User consent. Still, lawyers questioned whether this applies to the crypto the firm currently owns. In their overview of the case, they asked:
“Crypto-assets in Celsius are the property? Is the answer to this question different for Crypto holdings in Custody versus Crypto holdings in Custody? Winning program?”
detention program Released in April For non-accredited US investors, as some states in the US have placed stop and waiver orders in Celsius’s Earnings program.
Centigrade paused rewards and withdrawals for all users On June 13 and since then it has stopped issuing margin calls, liquidations and new loans.
Lawyer David Silver summed up Celsius’s claim regarding users’ funds in a tweet on July 18. He wrote that users should “stop thinking of* as your crypto” because technically it’s all owned by the firm.
11) Celsius says that anyone in the WIN program has no crypto of their own (so stop thinking of it as *your* crypto). Celsius owns crypto assets. Most of the assets in Celsius came through the EARN program and are part of the property.
— David Silver (SILVER MILLER) (@dcsilver) 18 July 2022
by chirp Nash of Financial Times correspondent Kadhim Shubber declared that Celsius users will “take care of getting through this crypto winter” and will allow Celsius to hold money rather than sell it. He added that this strategy will give users the opportunity to “make their recovery through an appreciation in the crypto macro environment.”
Essentially, Celsius wants to wait for the market to turn before selling to stay afloat and then pay users with more valuable assets.
Nash says Celsius’ recovery plan will include HODLing
“The vast majority of our clients will be interested in getting through this crypto winter, staying crypto long, and having the opportunity to realize their recovery with an appreciation in the crypto macro environment.”
— kadhim (＾ｰ^)ノ (@kadhim) 18 July 2022
The firm also claims it can sell. Bitcoin (BTC) it is mining through its affiliated mining business to pay off its debts. Celsius CEO Alex Mashinsky confirmed In a bankruptcy filing that his company plans to produce around 15,000 BTC by 2023, however, David Silver was skeptical about the claim.
Related: CoinFLEX continues withdrawals by limiting users to 10%
Silver appeared on Twitter gaps ended after the trial. At the approximately 1:07 mark in the conversation, he stated that Celsius’s claim to be a Bitcoin mining company was disingenuous.
“Can you imagine Patrick Nash basically and Kirkland lawyers telling you right now that Celsius is just a Bitcoin mining company? Because it’s all bullshit.”
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