Crypto lender Celsius Network, which started Chapter 11 bankruptcy proceedings in July, wants to return customer assets in the custody program and withhold accounts worth around $210 million, the firm said in a Sept. 1 filing.
According to the filing, around 15,680 Celsius users hold “Pure Custody Assets” worth approximately $43.87 million as of around August 27. Another 22,580 users hold “Transferred Custody Assets” worth approximately $11.25 million as of August 31, the firm stated in the filing.
Additionally, 5,000 Celsius users hold assets worth around $15.33 million in Withold accounts, according to the filing.
Celsius’ analysis has determined these assets to be part of customers’ properties and not belonging to its bankruptcy estate, according to the filing. Therefore, Celsius has petitioned the court to allow eligible customers to withdraw such assets from its platform.
The U.S. Bankruptcy Court Southern District of New York has set a hearing on the motion on October 6.
In the filing, Celsius claimed that assets in its Earn and Borrow program are assets of the estate. For instance, if a customer has an outstanding loan under the Borrow program, the assets in the user’s custody or withhold account could serve as collateral, and is, therefore, a property of the estate. The firm will not unfreeze accounts of such users, it said in the filing.
Celsius further stated that it is not seeking to return Custody or Withhold Assets to any current or former employees or employees of affiliates.
According to the filing, while the Celsius Creditors’ Committee is yet to give its full-fledged blessing to the proposal, the firm said the committee is “generally supportive of releasing the relevant cryptocurrency assets.”
Celsius’ filing comes a day after a group of creditors filed a lawsuit against the firm seeking repayment of around $22.5 million in the firm’s custodial accounts.
In its latest filing, the firm added that while some customers may be disappointed with the current proposal, it is the:
“first step toward, and not the last word on, efforts to return assets to customers where possible without jeopardizing the Debtors’ efforts to maximize value and distribute that value to all customers as fairly as possible.”
Celsius’ bankruptcy saga
Celsius Network was one of the first crypto lenders to halt withdrawals and transfers on its platform in early June. Soon after, a series of lenders followed suit. While Celsius filed for bankruptcy in July, other lenders started their own restructuring processes or sought bankruptcy protection to buy time to return customer funds.
Celsius had over 1.7 million registered users, of which, around 300,000 were active users with balances over $100, according to the filing.
Since the bankruptcy filing, Celsius has clashed with its customers on multiple occasions. In early August, a group of 400 Celsius users demanded a return of $180 million in Celsius’ custody program.
Soon after, Unsecured creditors of Celsius, a group representing user interests, accused Celsius CEO Alex Mashinsky of misleading customers by assuring them that their funds were “safe,” in the days leading u to the halt of withdrawals.