In a court order issued today by the United States Bankruptcy Court in the Southern District of New York, a motion filed by a former Celsius Earn account holder was denied.
Users try to get funds as Celsius announces recovery plan
The denied motion filed by Rebecca Gallagher was an attempt to obtain a judgment that would classify the assets in the accrual account as assets of Celsius rather than assets of its bankruptcy estate.
The proposal is the third of its kind to be rejected since July, when the major cryptocurrency lender filed for bankruptcy, affecting many known industry players as well as unsuspecting users.
While these motions have apparently been denied, customers may still have a chance to recover their money. According to CelciusFacts, a Twitter account that has been following the case closely provided important updates as they shared Celsius’ new recovery plan.
The plan includes taking the company public in compliance with SEC regulations in the United States. The company also aims to offer full and partial refunds to small users, while offering a form of tokenized loan to larger users.
$4.2 billion in user funds belong to Celsius
Earlier on January 4, Chief Justice Martin Glenn, the same judge who rejected the motion filed by Rebecca Gallagher, ruled that $4.2 billion worth of assets are locked within the Celsius Earn program, related to bankrupt crypto lending platform Which is opposite to the customers. who invested the money.
The ruling, which was made by the United States Bankruptcy Court for the Southern District of New York when dealing with three motions filed by Celsius’ customers, was based on the platform’s terms and conditions. According to Judge Glenn, the language employed in the company’s terms is straightforward and leaves no room for interpretation, invalidating any arguments made by customers of the platform.
The terms constitute a binding investment contract, “governed by New York law,” meaning ownership of the funds was transferred to Celsius as soon as the platform locked in the Earn program.
Celsius first announced liquidity issues in June 2022, failing to process user withdrawals due to “extreme market conditions”. The company filed for bankruptcy the following month. Since then, New York Attorney General Letitia James has announced the prosecution of former CEO Alex Mashinsky for defrauding investors.