Legal issues for the bankrupt cryptocurrency lender Celsius Network continue to mount as users who were unable to withdraw their funds in June take the company to court.
Dozens of Celsius clients sue US court to reclaim $22.5M in cryptoSuspension of withdrawals on Celsius custody defies the clear language of the firm’s terms of usage, a group of aggrieved creditors alleged.
An unrelated group of sixty-four Celsius custodial account holders file a petition the United States Bankruptcy Court for the Southern District of New York on Wednesday to reclaim their funds.
The claims file in court indicates that the creditors are after bitcoin assets worth over $22.5 million that are being took in custody by Celsius. Togut, Segal & Segal, a firm that specializes in bankruptcy law, is representing the organization.
Court documents state that Celsius “has not honoured any withdrawals from any programmes,” which includes custodial services. According to the complaint, that contradicts the “plain language of the debtors’ conditions of use,” as they specify that title to custody assets “always stays with the user.”
According to Celsius’ conditions of use, the right to any digital assets in its custodial wallet must “at all times remain” with users and not be transfer to the company.
“Celsius will not transfer, sell, loan or otherwise rehypothecate eligible digital assets held in a custody wallet unless specifically instructed by you, except as required by valid court order, competent regulatory agency, government agency or applicable law,”
With the ongoing bear market and liquidity issues in the crypto lending sector, Celsius is just one of many platforms that have encounter significant difficulties.
The $1.2 billion shortfall is mostly due to consumer liabilities for the company. Celsius initiate Chapter 11 bankruptcy proceedings in the middle of July.
Celsius sued the major U.S. custodian Prime Trust in late August, amidst continuing legal and liquidity issues.
The company Claim that Prime Trust owns it $17 million in cryptocurrency after the two companies serves ties in June of 2021.