Judge rules Celsius owns funds in Earn accounts, paving the way for stablecoin sale

Judge Martin Glenn, who is presiding implicit the Celsius bankruptcy case, ruled connected Jan. 4 that the funds successful the Celsius interest-bearing Earn programme beryllium to Celsius nether the presumption of the program’s presumption of use. The funds reportedly magnitude to much than $4 billion. 

“The contented of ownership of the assets successful the Earn Accounts is simply a declaration instrumentality issue,” Judge Martin wrote, citing the latest mentation of the Earn program’s presumption of usage that stated lending level Celsius held “all close and rubric to specified Eligible Digital Assets, including ownership rights.”

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The justice called the presumption of usage “unambiguous,” and pointed retired that, if the funds successful question beryllium to the debtor, their instrumentality volition beryllium connected a Chapter 11 program for distributions to unsecured creditors, resulting successful a much equitable effect than if immoderate of the relationship holders are declared owners of the funds locked up successful the program. The justice concluded:

“As has been said repeatedly successful this opinion, creditor’s rights with respect to assorted defence to and breach of declaration claims are reserved. Creditors volition person each accidental to person a afloat proceeding connected the merits of these arguments during the claims solution process.”

The tribunal gave Celsius an extension to travel up with a Chapter 11 restructuring program by Feb. 15. Judge Martin ordered the instrumentality of $44 million worthy of crypto held successful customers’ custodial accounts connected Dec. 7. Celsius declared bankruptcy July 14.

It’s official. #Celsius was an amerciable bank. Judge Glenn has ruled that Earn is spot of the property https://t.co/QLjTD1DN5B

— Simon Dixon (@SimonDixonTwitt) January 4, 2023

The ruling makes notation to $18 cardinal worthy of stablecoins successful the Earn programme that Celsius had sought to sell, saying it should beryllium allowed:

“In the workout of its concern judgment, the Debtors person established a bully concern crushed to licence the sale.”

The United States Trustee and authorities securities regulators had argued against allowing that sale, saying Celsius already had the liquidity to run “over the adjacent fewer months.”