Celsius faces demand to return $22.5 million to customers

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A group of Celsius custodial account holders asked the Southern District of New York court to issue a judgment requiring Celsius to allow withdrawals from the custodial accounts.

The statement was signed by 64 investors whohave placed at least $22.5 million worth of cryptocurrency in Celsius vaults. This separate group of clients is in no way associated with the Unofficial Committee of Creditors (UCC) of the bankruptcy company Celsius.

The document states that cryptocurrencygroups lies in custodial accounts and not in the Earn income-generating product. This meant that Celsius was required to place client assets in a separate vault on behalf of group members, who retained ownership of the assets. Therefore, when filing claims, clients should be able to get their funds back outside of the competition.

“At the hearing, the court made it clear that if the blocked assets are not Celsius property, then they must be returned to users,” the statement said.

The lawsuit alleges that a group of clients were unable to recover their assets:

“After negotiations with the UCC debtor and their counsel, we were unable to obtain the return of our assets as Celsius stated that it was unable to release funds belonging to clients.”

Customer group says Celsiusstill owns cryptocurrencies, which are not separated from the rest of the company's funds. According to the authors of the lawsuit, the company has the opportunity to allow the withdrawal of assets, but it did not do so:

“According to hundreds of letters filed with the registry and statements made by clients at court hearings, Celsius has created enormous hardship for asset owners.”

The group of plaintiffs is confident:Because the assets are not Celsius's property, the company does not have to freeze clients' assets during bankruptcy and cannot use them to pay creditors' claims.

However, bankruptcy specialistshired by Celsius Network, argue that users gave up legal rights to their funds the moment they deposited them on the platform and have no right to a refund.