A bankruptcy judge has shattered the dreams of investors hoping to get their crypto funds back from Celsius. Assets placed in former crypto exchange’s high-interest “earned accounts” turn out to belong to Celsius, not the account holders, according to a decision on Wednesday of Judge Martin Glenn.
The ruling comes down to an “unambiguous provision” in a section of Celsius’s Terms of Service, the judge wrote. “All rights and title to these qualifying digital assets, including ownership rights,” are owned by Celsius, said version 8 of the company’s terms, which 99.86% of Earn account holders have accepted, said. noted Glenn. Celsius’ incredibly shady terms of service also told the signatories that “you may have no legal recourse or rights” to recover your money, which the company says protects them from legal claims.
In practice, Judge Glenn’s decision effectively confirms this position and means that the company has no immediate obligation to reimburse approximately 600,000 investors in the middle of the stock market. ongoing bankruptcy proceedings. The over $4.2 billion that was frozen in the Celsius accounts last June does not belong to those who put it there, it is the property of the company that squandered it.
Thought, Technically, Rejected Earn Account Investors could still get some Celsius’ sort of compensation – the ruling means they’ll be the last to do so. “To be clear, this conclusion does not mean that holders of Earn Assets will get nothing from debtors,” Glenn wrote. “The amount of unsecured claims allowed is subject to later determination in this case (through the claims indemnification process) and may potentially include damages claimed by account holders.” Additionally, Celsius customers could sue the company and claim the terms they signed violated securities laws, but that doesn’t guarantee reimbursement.
If nothing else, let this remind you to always read the fine print when it comes to major financial transactions (and not turn your real fiat currency into digital monopoly currency). While this specific ruling only applies to Celsius, it highlights a much bigger problem within the totally unregulated cryptoverse. Many other platforms have similar terms for account holders like Celsius has/did, Aaron Kaplan, a financial lawyer and crypto company owner, told the Washington Post. Potential investors should “understand the risks they are taking by depositing their assets on poorly regulated platforms”, he added.
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Celsius lured clients with promises of absurdly high (read: too good to be true) interest rates of 18+%, which he had to do increasingly risky maneuvers to keep. The company first withdrawals interrupted and freeze accounts in June 2022. And despite all its attempts to reassure its users, the crypto network Filing for Chapter 11 bankruptcy a month later in the midst of a resolution crisis.
The crypto market Lost $2 trillion in value between November 2021 and summer 2022. The native Celsius token, also known as Celsius, fell over 79% in the six months to July 2022, and the exchange held a large portion of its total funds on its own , trash coin. Bonus: Celsius executives collected millions of funds just before stopping withdrawals for everyone else.
And if you think it all sounds sketchy and ponzi-esque, know that almost every state regulator agrees with you. At least 40 states had opened investigations into Celsius by early September 2022. Just yesterday, the New York Attorney General announced a trial against dethroned Celsius CEO Alex Mashinsky over deceptive investor allegations. Investors might not get their money back, but maybe Celsius and its executives will get their reward.
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