Celsius Bankruptcy: Court Ruling Solidifies Ownership of $4 Billion in Earn Accounts

Judge Martin Glenn Weighs In

On January 4, U.S. Bankruptcy Judge Martin Glenn settled a significant legal question in the ongoing Celsius bankruptcy saga, ruling that the funds tied up in the Celsius Earn program—totalling over $4 billion—are indeed owned by Celsius itself. This conclusion is based on the agreements laid out in the program’s user terms.

Terms of Use Take Center Stage

Judge Glenn highlighted that the ownership of the cash in the Earn Accounts boils down to a matter of contract law. According to the enticing, albeit dense, legalese of Celsius’s terms of use, the platform retained “all right and title” to the so-called “Eligible Digital Assets.” That’s legal jargon for “it’s ours, folks!”

Chapter 11 Plan Implications

What’s fascinating about this ruling is its double-edged sword effect on creditors. Because the funds are deemed part of the debtor’s estate, their retrieval hinges on how Celsius plans to distribute assets through a Chapter 11 restructuring plan, which must be ready by February 15. Talk about an incentive to get those filing cabinets in order!

A Little More on Those Stablecoins

In the course of the hearing, Judge Glenn also commented on a proposed sale of $18 million worth of stablecoins from the Earn program. Despite objections from the United States Trustee and state regulators—which felt Celsius had enough liquidity to last a while longer—Glenn deemed the sale justified under business rationale, asserting the debtors had a good cause to proceed. It’s great to see some common sense amidst the chaos.

What Does This Mean for Creditors?

For creditors, this ruling guarantees a structured legal approach to address claims. Judge Glenn asserted that all defenses regarding breach of contract claims will be preserved. Thus, creditors will have their chance to make their case on the merits during what’s likely to be a contentious claims resolution process.

“As has been said repeatedly in this opinion, creditor’s rights with respect to various defense to and breach of contract claims are reserved,” said Judge Glenn.

It’s a dramatic saga for what was once a major player in the cryptocurrency scene, but it proves that in the world of finance—both traditional and digital—there’s always room for a good legal battle.