The Federal Judge from the U.S. Bankruptcy Court Southern District of New York rules in favor of Celsius, claiming that all the users’ assets deposited in the crypto interest-bearing accounts belong to the estate and not the users.
This significant ruling seems to be a major setback for the customers who had trusted $4.2 billion worth of their crypto on the platform.
“The objectors say that numerous statements by Celsius’s former Chief Executive Officer (“CEO”), Alex Mashinsky, and possibly other extrinsic evidence, demonstrate that the Account Holders have always owned the assets in the Earn Accounts,” the court filing reads.
Thanks to the unclear policies of its High-interest Earn program kept by Celsius in its terms and conditions, the judge gave the decision that would benefit the crypto lender company more.
This earning program had a massive interest rate of around 18%, which attracted many users to deposit their Bitcoin, Ether, and other virtual currencies in return for weekly profit.
However, after the market crashed and crypto lost half of its price value in July 2022, Celsius went on default and paused withdrawals of 600,000 registered accounts in the earning program.
The lack of self-custody over keys and funds has cost Celsius users a million-dollar loss and now even the law cannot protect them or help them get back the money after the recent decision made with a 45-page court filing.
Following the decision, FTX customers are also fearing that the court might also give the decision in favor of SBF, who was recently let go for a $250M bail, with the same ruling of users’ non-custody over their own keys.
