Celsius Clients File Lawsuit to Recover $22,500,000 in Crypto Assets from Bankrupt Digital Asset Lender

A group of Celsius Network custodial wallet customers are suing the bankrupt lending platform in a bid to recover more than $22.5 million in funds.

in a new court case filed Wednesday, individual holders of more than 64 accounts at Celsius say they have retained title to all of their crypto assets held in the company’s custodial wallets and are therefore entitled to their return.

The account holders argue that Celsius cannot use their funds to pay off debts from the bankruptcy.

“In April 2022, debtors [Celsius] created an eponymous “custody service” where users entrusted their cryptocurrency to debtors in a “custodian wallet” but retained title to those assets…

In June 2022, Debtors froze all cryptocurrency withdrawals from their platform. Since that date and since the date of the Petition, Debtors have not honored any withdrawals from any program, including the Custody Service, even though the Custody Assets – according to the plain language of the Debtors Terms of Use provide that title to custodial assets always remains with the user.”

Thursday, Celsius deposit a petition to the same bankruptcy court seeking permission to allow certain customers to withdraw their cryptocurrency from their custodial program. A hearing on the motion is scheduled for October 6.

Celsius Network initially filed for bankruptcy in mid-July, just weeks after halting all transactions and customer withdrawals, blaming extreme market volatility.

The project’s native CEL token briefly crashed from around $0.90 to as low as $0.09. It has currently mounted a rally and is changing hands for $1.41 at the time of writing.

Since the bankruptcy, the centralized financial company has also been the subject of a class action lawsuit alleging that it operated as a Ponzi scheme.

Additionally, the California Department of Financial Protection and Innovation issued Celsius a cease and desist order regarding allegations that the company violated local corporate code.

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