Celsius Network

History

2023

Arrest of co-founder in the United States

On July 13, 2023, it became known that the co-founder of the Celsius criticoplatform, Alexander Mashinsky, was arrested in the United States. He faces charges of fraud in the cryptocurrency market. Read more here.

Investors lose $4.2 billion due to crypto platform bankruptcy

On January 4, 2023, a U.S. bankruptcy court in the Southern District of New York ruled that the bankrupt Celsius Network crypto platform was not required to return the funds to its investors.

On the Celsius platform, users could contribute a number of cryptocurrency digital assets, including bitcoin, Ethereum and Tether, receiving percentage returns. In addition, loans were provided, under the terms of which cryptocurrencies acted as a means of collateral. In particular, Celsius has deployed the highly valuable Earn program, which attracted about 600 thousand users. As of July 10, 2022, the total value of assets under Earn was $4.2 billion. About $23 million of this amount came from stablecoins. The interest rate reached 18% per annum.

Court allows Celsius Network not to return money to investors after bankruptcy

Before filing for bankruptcy, Celsius froze withdrawals for customers in June 2022, citing "extreme market conditions." This ban was never lifted. Users demanded the return of invested digital assets, but they will not be able to get money. A federal bankruptcy judge has ruled that cryptocurrencies held in Celsius' interest accounts are now owned by the company itself. It was these conditions that were spelled out in the user agreement that was concluded with depositors. Through Celsius "unambiguous" terms, any cryptocurrency assets, including stablecoins that were deposited into Earn accounts, became Celsius' property, court documents say.

Most likely, users will not be able to challenge the court order. When conducting bankruptcy proceedings, priority in obtaining frozen funds is often given to secured creditors. But the holders of Earn program accounts are seen as unsecured creditors of Celsius.^[1]

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