The dreams of investors have been dashed by a bankruptcy judge. According to a Wednesday ruling from Judge Martin Glenn, the assets placed in the high interest accounts belong to Celsius.
The judge said that the decision was down to a single provision in the terms of use. According to version 8 of the company's terms, all right and title to eligible digital assets, including ownership rights, is held by Celsius. The company has argued that it protects them from legal complaints because of the shady terms of service.
In practice, Judge Glenn's ruling effectively confirms that stance, and means that the exchange has no obligation to repay investors immediately. The $4.2 billion that was frozen in Celsius accounts last June isn't owned by the people who put it there, it's owned by the company that wasted it.
The ruling means that they will be last in line to get compensation from Celsius. Glenn wrote that the finding doesn't mean holders of earn assets won't get anything from the debtor. The amount of allowed claims is subject to later determination in this case, and may include damages claimed by account holders. Celsius customers can claim that the terms they signed violated securities laws, but that doesn't mean they'll get their money back.
It is a reminder to always read the fine print when it comes to major financial transactions. The ruling only applies to Celsius, but it highlights a larger issue. According to the Washington Post, many other platforms have the same terms for account holders. He said that would-be investors need to understand the risks they are taking.
Celsius had to make riskier maneuvers to fulfill its promise of high interest rates, which it had to make too. In June 2022, the company stopped withdrawing and freezing accounts. The network filed for Chapter 11 bankruptcy a month after all of its attempts to assure its users.
The market lost $2 trillion over the course of two years. The exchange held a large chunk of its total funds in its own trashed coin, as the Celsius native token plummeted by more than 80% over the six months leading up to July 2022. Celsius executives cashed out millions of dollars before they stopped withdrawing money.
Nearly every state regulatory body agrees with you if you think that all sounds shady and ponziesque. A number of states had begun investigations into Celsius by early September. The Attorney General of New York announced a lawsuit against the dethroned CEO of Celsius. The investors might not get their money back, but they might get some payback.
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