Users’ Funds Belonged To The Company, Claim Celsius Lawyers
- Celsius lawyers claim that the users who registered on the platform lost the right to their funds
- The users transferred the title of their coins to the firm as per its terms of service (ToS)
The lawyers representing Celsius Network claim that the users who registered on the platform had lost th rights to their funds due to the terms of services (ToS) of the platform. The firm had more than 1.7 million users across 100 nations who signed up for its Earn and Borrow accounts services.
In the first bankruptcy hearing for the firm which took place on Monday, as per a previous report from BitcoinWisdom, lawyers from the Kirkland law firm led by Pat Nash explained how users lost the rights to their funds when they accepted the ToS of the platform.
Hence, the crypto lending firm is independent and free to “use, sell, pledge, and rehypothecate those coins” as per its wishes, explained the lawyers of the firm.
However, a legal question that arises here is whether the Custody account holders retain title for their assets. Interestingly, the Terms of Services of Celsius confirms that the crypto lending platform cannot use the coins in Custody accounts without user permission.
“Are the crypto assets in Celsius’ possession property of the estate? Is the answer to this question different for crypto assets held under the Custody vs. the Earn program?”asked the laywers.
The Custody accounts feature was launched in April for non-accredited US investors after authorities from several nations issued a cease and desist orders on Celsius’s Earn program.
Attorney David Silver summed up the claim made by Celsius lawyers stating that users need to “stop thinking of it as *your* crypto” since as per ToS, it now belongs to the firm.
Interestingly, a reporter for Financial Times, Kadhim Shubber stated that Nash proclaimed that Celsius users would be “interested in riding out this crypto winter” and hence, would consider that the funds are safer in the hands of the crypto lending firm.
Meanwhile, the cryptocurrencies that the firm holds will not be available for withdrawals, as BitcoinWisdom noted. Furthermore, the customers will not be receiving rewards either as reward accruals are paused, stated Celsius in an FAQ blog.