Users of the Celsius Network may have signed away their own rights to their crypto assets while accepting the platform’s terms of service (ToS). As per lawyers representing Celsius, many of the 1.7 million registered Celsius users from over 100 nations have already transferred the title of their assets to the crypto lending firm, that is now free to use, sell, pledge, and rehypothecate them according to its requirements. The users more at risk of having lost their assets are the ones that held Earn and Borrow accounts with Celsius.
Earlier this month, Celsius hired a legal team from the Kirkland & Ellis LLP law firm to assist it in the process of its corporate restructuring.
After having filed for bankruptcy, Celsius lawyers have assembled documents claiming company rights over a group of user assets
As per Attorney David Silver from the SilverMiller law firm, all the crypto assets deposited with Celsius technically belongs to the company itself.
11) Celsius says that anyone in the EARN program has no crypto that belongs to them (i.e., stop thinking of it as *your* crypto). Celsius is the owner of the crypto assets. Most of the assets in Celsius came in through the EARN program and is part of the estate.
— David Silver (SILVER MILLER) (@dcsilver) July 18, 2022
There are however, those Custody accounts on Celsius, assets deposited in which may still be retained by the original owners.
Celsius launched this Custody programme in April for non-accredited investors in the US.
As per the platform’s ToS, it cannot use virtual assets in Custody accounts without the permission of the users.
For now, Celsius is aiming at keeping its business afloat somehow given the downturn that the crypto market has taken in recent months.
Meanwhile, the probe on its bankruptcy filing is also underway in the US.
The company could be considering to wait for the industry situation to better itself before selling off assets in its possession and then paying back users with more valued assets, a CoinTelegraph report said.
Nash says Celsius’ recovery plan will involve HODLing
“The vast majority of our customers are going to be interested in riding out this crypto winter, remaining long crypto, having the opportunity to realise their recovery through an appreciation in the crypto macro environment”
— kadhim (＾ｰ^)ノ (@kadhim) July 18, 2022
On June 13, Celsius Network paused withdrawals, swaps, and transfers citing liquidity concerns.
The platform’s operational model offered crypto lending against high interest rates to those users who provided liquidity and committed their funds.
Just when the company began to face the wrath of the market slowdown, it also began seeing losses on the large amounts of staked Ether (stETH) it had in its accounts for lending people.
The Celsius Network resorted to laying-off 150 of its workers stationed in the US and Israel — as an immediate cost-cutting measure.
In the last three months, the overall market cap of the crypto sector that stood at over $2 trillion (roughly Rs. 15,610,304 crore) around March, has tumbled down to its current figure of over $914 billion (roughly Rs. 72,62,109 crore).