There's a new positive development for some of Celsius' users. On Wednesday, Bankruptcy Judge Martin Glenn ruled that some Celsius Network customers should receive their deposits back. Some accounts were not blended with others, and Celsius must return $44M to its users.
The U.S. bankruptcy judge ruled in favor of the users. According to Judge Glenn, there are two types of Celsius accounts: earn and custody. The ‘earn’ accounts were the accounts that paid interest to its customers, which were the default accounts offered by Celsius. Users would deposit their money, and Celsius would lend it to them.
However, regulatory investigations determined that ‘earn’ accounts were unregistered securities offerings. After this, Celsius created custodial accounts that earned no interest.
And that's where Judge Glenn's ruling comes in.
Celsius did not commingle custodial account users' funds with other Celsius assets — their funds were not used for lending. According to Celsius' official creditors' committee, these accounts were too small for Celsius to attempt to recover them from repaying other customers.
The creditors' committee previously estimated the amount at stake for escrow account holders to be at least $44M.
The judge issued the order verbally on Wednesday. Judge Martin Glenn has yet to rule on the legal treatment the 'earn' accounts should receive. It's a tiny step for the stranded Celsius users, but it's in the right direction. We can only hope things get better from now on.
