(Bloomberg) -- US Bankruptcy Judge Martin Glenn ordered Celsius Network LLC to return cryptocurrency that never touched the lender’s interest-bearing accounts to its customers.
The order, delivered verbally in a hearing Wednesday, applies to a pile of crypto worth roughly $44 million in September. It’s a tiny a fraction of the billions of dollars of coins owed to Celsius users.
The move comes after Celsius advisers and various stakeholders came to the conclusion that coins placed solely into so-called custody accounts belong to users, rather than the bankrupt company. The legal treatment of coins in interest-bearing accounts — which account for most of Celsius’ assets — has yet to be decided.
“I want this case to move forward,” Glenn said in the hearing. “I want creditors to recover as much as they possibly can as soon as they possibly can.”
Celsius had more than $200 million of assets in custody accounts as of September, but the majority of those coins were moved into custody accounts from interest-bearing accounts shortly before the bankruptcy. That means Celsius may be able to claim ownership of that crypto because of rules surrounding so-called preferential transfers.
Glenn didn’t order the return of those coins, unless the transfers were for less than about $7,500. A little more than $11 million of crypto fit into that bucket as of September, according to court papers.
The bankruptcy is Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York (Manhattan).
--With assistance from Steven Church and James Nani.
©2022 Bloomberg L.P.
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