Judge denies motions from Celsius users seeking to reclaim assets

A justice overseeing bankruptcy proceedings for crypto lending steadfast Celsius Network has denied motions from 3 users with antithetic claims connected assets stuck since July.

In orders filed with United States Bankruptcy Court successful the Southern District of New York connected Jan. 25, Judge Martin Glenn denied a question from Rebecca Gallagher, a Celsius claimant who argued her interest-bearing 'Earn' assets connected the level were “her spot and not spot of the bankruptcy estates” nether the power of the debtors. The justice denied akin motions from Celsius relationship holders Mark Benzaken and Kulpreet Khanuja.

Motions from the 3 individuals included claims that Celsius’ presumption of usage did not let for transferring their assets from the level to power of the debtors successful the lawsuit of bankruptcy. Gallagher and Khanuja some called retired Alex Mashinsky by name, claiming the erstwhile Celsius CEO misled customers with nationalist statements and said users would clasp afloat ownership of their assets, respectively.

Judge Glenn said the tribunal took the allegations against Mashinsky “seriously,” but denied each 3 motions. On Khanuja’s case, helium said:

“Any assertion that Celsius breached its declaration with Khanuja would not impact the ownership of cryptocurrency deposited successful Khanuja’s account. As the Earn Opinion explains, the cryptocurrency deposited successful Earn Accounts became spot of Celsius [...] the cryptocurrency successful Khanuja’s Earn Accounts was and remains spot of the estate.”

Louise Abbott, a spouse astatine United Kingdom-based steadfast Keystone Law, told Cointelegraph successful December that 1 ineligible maneuver disposable to FTX users — the speech is besides going done the bankruptcy process successful the U.S. — would beryllium to assertion their crypto and fiat assets “remained their spot astatine each times” and shouldn’t beryllium nether the power of the debtors’ estates. Though Abbott was referring to FTX funds donated to 3rd parties, the caller rulings successful the Celsius lawsuit suggested its presumption of usage granted the level “all close and rubric to specified Digital Assets, including ownership rights”.

Related: Bankruptcy justice orders $44M successful crypto to beryllium returned to Celsius customers

Celsius reported liquidity issues successful June 2022 and blocked idiosyncratic withdrawals, citing “extreme marketplace conditions.” The institution aboriginal filed for bankruptcy successful July. U.S. authorities person filed suit against Mashinsky for his role successful the platform’s downfall for allegedly giving “false and misleading statements” to investors and hiding the firm’s “dire fiscal condition”.