Judge refuses claims by Celsius users to recover assets

Two claimants named former Celsius CEO Alex Mashinsky in motions, saying that he deceived users, while all argued that the platform’s terms of service placed their assets in their possession.

A court hearing over the bankruptcy proceedings of cryptocurrency loan company Celsius Network has refused requests from three customers with claims on assets that have been stalled since July.

On January 25, 2019, Judge Martin Glenn of the US Bankruptcy Division for the Southern District of New York refused a motion made by Celsius claimant Rebecca Gallagher, who maintained her interest-bearing “Earn” holdings on the platform were “her property and not property of the bankruptcy estates under the authority of the debtors.” Two Celsius users, Mark Benzaken and Kulpreet Khanuja had identical requests turned down by the court.

In their motions, the three persons said that Celsius’ terms of service prohibited the transfer of their assets to the hands of the debtors in the event of bankruptcy. Gallagher and Khanuja also named Alex Mashinsky, saying that the former Celsius CEO deceived consumers with public remarks and that users would maintain full control of their assets, respectively.

Judge Glenn said that the court took Mashinsky’s claims “seriously,” but refused all three applications. Regarding Khanuja, he stated:

“Any allegation that Celsius broke its contract with Khanuja would not impact Khanuja’s ownership of the cryptocurrencies placed into his account. According to the Earn Opinion, all cryptocurrency held inside Earn Accounts belongs to Celsius, whereas all cryptocurrency held within Khanuja’s Earn Accounts belongs to the estate.

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.