The terms of use for the Earn program were deemed “unambiguous” by Judge Martin Glenn, and he concluded that treating account holders as unsecured creditors was the more equitable course of action.
According to a ruling made on January 4 by Judge Martin Glenn, who is presiding over the Celsius bankruptcy case, the funds that are held in the interest-bearing Earn program by Celsius belong to Celsius as per the terms of the program’s terms of use. According to reports, the total amount of the funds exceeds $4 billion.
According to the most recent iteration of the Earn program’s terms of service, “the issue of ownership of the assets in the Earn Accounts is a contract law issue,” which was written by a bankruptcy judge in the United States. Within these terms, it is stated that the lending platform Celsius held “any and all rights and titles to such Eligible Digital Assets, including ownership rights.”
The judge referred to the terms of use as “unambiguous,” and he pointed out that, if the funds in question belong to the debtor, their return will depend on a Chapter 11 plan for distributions to unsecured creditors. This will result in a more equitable outcome than if some of the account holders are declared owners of the funds that are locked up in the program. According to the judge’s findings:
“Creditor’s rights with respect to various defenses to and breach of contract claims are reserved, as has been stated numerous times in this opinion,” During the course of the claims resolution process, the creditors will be afforded every opportunity to have a full hearing on the merits of these arguments.
The deadline for Celsius to submit a Chapter 11 restructuring plan has been extended to February 15 after the court granted an extension. On December 7, Judge Martin issued an order mandating the return of cryptocurrency valued at $44 million that was being held in custodial accounts belonging to customers. On July 14, Celsius announced that it would file for bankruptcy.
The ruling makes reference to stablecoins in the Earn program worth $18 million that Celsius had sought to sell and says that it should be allowed:
“The Debtors have established a good business reason to permit the sale in the exercise of their business judgment,” which means that they have decided to go ahead with the sale.
The United States Trustee and state securities regulators had argued against allowing that sale, saying that Celsius already had the liquidity to operate “over the next few months.” However, the sale was ultimately allowed to go through.
