The funds are made up of cryptocurrency held in custody accounts on Celsius that was not transferred from earned accounts.
A federal judge has ordered cryptocurrency lender Celsius to return crypto worth approximately $44 million to customers of the platform’s custody program.
According to Bloomberg, United States Bankruptcy Judge Martin Glenn issued the verbal order during a hearing on December 7, noting:
“I want this case to move forward. I want creditors to recover as much as they possibly can as soon as they possibly can.”
The amount which only applies to crypto held in custody accounts is a pittance compared to the billions Celsius owes creditors, and the latest decision follows an agreement reached between Celsius advisers and stakeholders that crypto deposited in custody accounts belonged to its users, not the platform.
It should be noted that this order only applies to pure custody assets those that have never touched Celsius’ Earn accounts and have always been held in the custody program.
Celsius had over $210 million in custody accounts as of Aug. 29, but only about $44 million of those funds met the criteria of the most recent order.
On the other hand, the majority of the $4.7 billion in user funds is currently locked up in Celsius’ Earn accounts, which are the accounts that allowed depositors to earn interest.
Celsius has argued that users who deposited funds in its earn accounts gave up ownership of the funds when they agreed to the company’s terms of service, and a December 5 Bloomberg report suggests that Celsius is looking to sell $18 million in stablecoins held in these accounts to fund its reorganization, with Glenn scheduled to address the issue of fund ownership on December 12.
Meanwhile, the lender received judge approval on Dec. 5 for a $2.8 million key employee retention program (KERP) that it filed on Oct. 11.
The bonuses will be paid to selected employees and are intended to keep their employees with the firm so that it can continue its limited business operations.
Celsius employees have been leaving in droves, with only 170 remaining from a workforce of 370 when the company filed for bankruptcy.