Celsius Network Ltd., the bankrupt cryptocurrency lender, is attempting to return coins to a small number of users who have been locked out of their accounts.
The company requested permission from a US bankruptcy judge to release almost $50 million in cryptocurrencies held on the site in so-called custody accounts, which were designed to store digital assets rather than earn returns. According to court documents, a full hearing on the request is scheduled for October 6.
The move reflects a schism among the many thousands of people who were harmed by the company’s insolvency.
According to the company, customers who deposited cryptocurrency with the intention of collecting interest on their holdings handed over ownership of the coins to Celsius, whilst others who just stored their assets on the platform technically retained possession to the coins.
Celsius’s request for $50 million is only a fraction of the more than $200 million stuck in custody accounts on the platform. This is because many users transferred their holdings from interest-bearing accounts to custody arrangements just before the bankruptcy, which may allow Celsius to take ownership over the coins, according to a lawyer for Celsius at a Thursday hearing.
The custodial accounts represent only a small portion of the crypto users who have not recovered from Celsius. According to court documents, the market value of assets in so-called earn accounts was almost $4.2 billion as of July 10.
Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York is the name of the bankruptcy case (Manhattan).