Judge Orders Celsius Network to Turn in $50M, a Fraction of Clients’ Lost Funds

YEREVAN (CoinChapter.com) – Celsius Network, the infamous crypto lender that crumbled in July 2022, hit by Terra contagion, is obligated to return $50 million to its custody wallet clients.

Over $210M Lost amid Celsius Liquidity Crisis.

US Bankruptcy Judge Martin Glenn delivered a verbal order during the hearing on Dec 7. However, the said order applies to custodial wallets only. As per Bloomberg, the “pile of crypto” in question was worth roughly $44 million in September and does not include interest wallets.

Hence, the ordered amount is a fraction of the “billions of dollars” the company owes to its interest users. Moreover, after the Chapter 11 bankruptcy, Celsius filed a motion to “seek entry of an order authorizing the debtors to reopen withdrawals for certain customers.”

According to the filing, Celsius’ 58,300 custody and withhold clients deposited over $210 million on the platform. In addition, over 15 thousand customers holding “Pure Custody Assets” are worth around $50 million.

Did FTX Trip Celsius or Alex Mashinsky?

Meanwhile, there was speculation among CEL investors that the crypto lender did not go bankrupt “out of the blue.”

Julian Hosp, the founder/CEO of Cake DeFi, tweeted a video on June 15, soon after Celsius admitted to liquidity issues, detailing how FTX was allegedly behind the company’s demise. He called FTX executives “La Familia,” hinting at their mafia-like connections.

Meanwhile, Celsius CEO Alex Mashinsky preferred to chat about FTX on Dec 2, with no word on Celsius’ debt.

While some users joined Julian Hosp in blaming FTX for Celsius’ demise, others blamed Mashinsky for the fiasco.

Death Threats

As CoinChapter reported at the time, in a shady move revealed in early October, Mashinsky withdrew $10 million from the platform before its demise.

The decision sparked concerns that the former CEO was ‘saving his hide’ while not extending the same courtesy to the customers as he knew the company would be in straits after the Terra implosion.

However, Mashinsky’s spokesperson asserted that $8 million was used to pay taxes for the income generated on assets on Celsius. The remaining $2 million was in CEL tokens and utilized for “estate planning.”

In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May.

commented the spokesperson.

They also added that Mashinsky worked towards “uniting the community around a recovery plan that will maximize coin and liquidity for all.”

Mashinsky Asks Elon Musk to Stop Threats

In a fresh tweet from Dec 8, Mashinsky addressed Twitter CEO Elon Musk to “take action against users who are threatening [his] family with physical violence for the past six months.” The former CEO also retweeted a similar post from his wife, citing “public threats to their children.”

Also read: Who is the Mysterious Entity Behind Backdoor Cryptocurrency Hacks on Investment Firms?

Celsius fell victim to the Terra contagion in early June, experiencing a combination of a bank run and liquidity shortage. However, speculations continue about the former crypto lender’s ability to repay its debt to the clients.

Will the first $50 million be paid in the coming months? The crypto community watches closely to find out.

Click here to keep up with the ever-changing crypto market and never miss the scoop!