Celsius lawyers claim users waived legal rights to their crypto

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According to the firm’s attorneys, Celsius’s 1.7 million registered users in more than 100 countries have ceded ownership of the crypto they have deposited in Earn and Borrow accounts.

At Celsius’s first bankruptcy hearing on Monday, attorneys at the Kirkland law firm headed by Pat Nash detailed how retail users with Earn and Borrow accounts transferred title to their coins to the company in accordance with its terms of service (ToS). As a result, Celsius is free to “use, sell, pawn and remortgage these coins” as it sees fit.

Terms of Service for Celsius Accounts.

However, a legal question has arisen as to whether deposit account holders retain ownership of their assets. Celsius ToS claims that the company cannot use coins in custodial accounts without user permission. Still, the lawyers questioned whether that held true for the crypto the company is currently in possession of. In their overview of the case, they asked:

“Are the crypto assets in possession of Celsius property of the estate? Is the answer to this question different for crypto assets held under the Custody vs. the Earn? »

The Custody program was launched in April for non-accredited US investors as some US states issued cease-and-desist orders under Celsius’ Earn program.

Celsius suspended rewards and withdrawals for all users on June 13 and has since suspended margin calls, liquidations and the issuance of new loans.

Attorney David Silver summarized Celsius’s claim to user funds in a tweet on Monday. He wrote that users should “stop thinking of it as *your* crypto” because technically everything belongs to the company.

According To a tweet from Financial Times reporter Kadhim Shubber, Nash proclaimed that Celsius users would be “interested in getting through this crypto winter” and letting Celsius hold funds rather than sell. He added that this strategy would allow users to “achieve their recovery through an appreciation of the crypto macro environment.”

Essentially, Celsius would like to wait for the market to recover before selling to ensure it can stay afloat and then pay users with assets that are more valuable.

The company also claims that it can sell Bitcoin (BTC) which it mines through its mining subsidiary to pay off its debts. Celsius CEO Alex Mashinsky claimed in a bankruptcy filing that his company plans to generate around 15,000 BTC through 2023, but David Silver doubted that claim.

Related: CoinFLEX resumes withdrawals, limiting users to 10%

Silver appeared in a Twitter space after the end of the hearing. At about 1:07 into the conversation, he said Celsius’s claim of being a Bitcoin mining company is misleading:

“Can you imagine right now that Patrick Nash, basically, and Kirkland lawyers have now told you that Celsius is just a bitcoin mining company? Because it’s all just fluff.

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