A bankruptcy judge has ruled that thousands of former Celsius customers don’t own their own accounts. The case could have far reaching implications
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It was an unwelcome ruling for about 600,000 Celsius account holders, who are probably wishing they’d read the fine print more closely before investing. Or put more stock in the crypto mantra, “not your keys, not your coins.”
Earlier this month, federal Bankruptcy Judge Martin Glenn found that when people deposited assets with the now bankrupt crypto lender Celsius — and in exchange received interest on those deposits — those assets became the property of Celsius. That makes customers of the so-called Celsius “Earn Program” unsecured creditors who are unlikely to get all their money back from the lender (again because, well, bankruptcy).
Many investors signed up for these accounts in part because of the potentially high returns Celsius promised on their deposits — up to 18 percent. That’s far more interest than you’d make at a savings bank. But unlike at a bank, the deposits, held in crypto, were not covered by federal deposit insurance.
To add some context, the value of those accounts back in July topped $4 billion.
The ruling could impact other crypto platform arrangements too.
Bloomberg’s Jeremy Hill joins this episode to break down the judge’s opinion and explain its wider implications.
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