Celsius case: They are trying to recover 22.5 million dollars

For several months, the suspension of customer cryptocurrency withdrawals has been a real problem. Still, it appears Celsius’ holding on to cryptocurrencies is inconsistent with the company’s terms of service, a group of disgruntled creditors have claimed.

Dozens of unhappy Celsius customers

Cryptocurrency lending and borrowing service Celsius Network is facing new legal issues. Indeed, disgruntled customers are taking action to recover their funds after the platform froze withdrawals in June. As of last Wednesday, a group of 64 users with funds at Celsius filed a lawsuit in the United States Bankruptcy Court for the Southern District of New York to recover their assets.

According to court documents, creditors are seeking to recover more than $22.5 million in cryptocurrency assets held collectively in Celsius’ custody. The group is represented by the law firm Togut, Segal & Segal, which specializes in bankruptcy. The plaintiffs noted that Celsius “did not honor any withdrawals from any programs,” including child care. According to the complaint, this contradicts the “Terms of Service”. These provide that title to custodial assets “always remains with the user”.

According to Celsius’s terms of service, title to any digital assets in its custody wallet must “at all times remain” with customers and not be transferred to the company.

Celsius will not transfer, sell, lend or otherwise re-mortgage eligible digital assets held in a custody wallet unless specifically requested by you, unless required by law. valid court order, relevant regulatory body, government agency or applicable law“, can we read. The Terms of Service were last revised in April 2022, they note.

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A difficult end for Celsius and its users

Celsius is one of several cryptocurrency lending platforms that have experienced major issues. This all comes amid the ongoing bear market and associated liquidity issues in the cryptocurrency lending industry. The company has a $1.2 billion gap in its balance sheet. Unfortunately, most of the debts are owed to its users. Celsius filed for Chapter 11 bankruptcy protection in mid-July.

Amid ongoing legal and liquidity challenges, Celsius has filed a lawsuit against the main US custodian Prime Trust at the end of August. The firm argued that Prime Trust failed to return $17 million worth of cryptocurrency in June 2021. Sums that were owed as the firm ended its relationship with Celsius. Even so, it’s still unclear where and when this streak will end or if users will get their funds back. A sad episode that will, once again, mark the crypto ecosystem forever.

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