• The Judge has granted the platform the right to sell millions of dollars of stablecoin belonging to 600,000 Earn customers.
• The customers are now classified as unsecured debtors under bankruptcy law and will not be able to recover the full amount of their claims.
• The Judge has approved the sale of $18 million worth of stablecoins held by Celsius Network, despite objections from U.S. states.
The Judge has recently made a ruling in favor of crypto lending platform Celsius Network, granting it the right to sell millions of dollars of stablecoin belonging to 600,000 Earn customers. This move now allows the bankrupt platform to use the funds however it wants. This fund belonged to nearly 600,00o Earn program users who initially allowed customers to make interest on their crypto deposits.
With this, Earn customers are now classified as unsecured debtors under bankruptcy law. Moreover, the court document stated that there will not be enough funds to repay all the customers in full. On top of that, customers will have to „prevail with their arguments that they own the cryptocurrency assets in their accounts, they hope to recover 100% of their claims“.
The ruling also addressed the platform’s move to sell $18 million stablecoins it held in Earn accounts. The U.S. states had sought to block this sale arguing that it was unnecessary given Celsius Network still had money left to conduct operations for a few more months. The Judge, however, favored Celsius even in this matter, ruling, „it is unnecessary to resolve whether the proposed sale of stablecoins would be in the ordinary course of business because the sale should be approved outside the ordinary course of business“.
This ruling come as a major win for Celsius Network, which will now be able to use the funds as it wishes. For Earn customers, however, this is a major setback as they will not be able to recover the full amount of their claims. Moreover, the Judge’s approval of the sale of $18 million worth of stablecoins held by Celsius Network has been seen as a controversial move by U.S. states.
Regardless, the ruling has been made and it will be interesting to see how the platform utilizes the funds it now has control over. For Earn customers, the hope is that they can still recover some of the funds they had deposited with Celsius Network.