Bankrupt crypto lender 'Celsius' claims ownership of customer deposits in court
Categories: Crypto News US
Bankrupt crypto lender 'Celsius' claims ownership of customer deposits in court
When cryptocurrency lender Celsius filed for bankruptcy last week, it was well known that the company took huge risks with user deposits.
writing on the wall
Before Celsius declared bankruptcy, a report in The Wall Street Journal found that the lender took on more than twice the risk of a traditional bank, with an asset-to-asset-to-asset-to-insurance ratio of 19:1, compared to a median of North American banks reflected in the equity ratio. , which is closer to 9:1. In other words, Celsius had more than double the liability of a traditional bank, making it intrinsically more risky.
Couple that with a business model based on material leverage and when the tide turns (as in the crypto market in 2022) you are left with very little margin for error. Unfortunately for Celsius customers, Coppola's assessment has largely hit the mark, at least according to the arguments being made by the Celsius legal team. Three major segments of Celsius' retail business were identified - "earnings", "borrowing" and "custodial".
Of these, 77 percent were in the "tanning" program, while only 4 percent were in the "custody" program. In the case of bankruptcy, these differences are significant. In terms of the company's terms and conditions, "earning" users effectively handed over ownership of their crypto to Celsius, which seemingly could have done so as they wished. Specifically, the wording provides that.
"The title of the coins is transferred to Celsius, and Celsius is entitled to use, sell, mortgage and redefine those coins". Although the status of “borrowed” users is unclear, “custody” users are said to retain ownership in their crypto, which unfortunately accounts for only 4% of users.Designed as a whole, which will improve (and, hopefully, be suitable for the future). Thus, from this cycle a presumption was fulfilled, which was corroborated, and was fulfilled and understood.