The judge overseeing Celsius Network LLC’s bankruptcy case is expected to decide if the crypto firm has full ownership rights over customer deposits, a key legal issue that may resonate for millions of other users of failed crypto platforms, WSJ Pro Bankruptcy reported. Judge Martin Glenn of the U.S. Bankruptcy Court in New York is set to consider this week whether Celsius has the right to lend, sell and reinvest billions of dollars of crypto deposited in its high-interest accounts. Customers have clamored for a return of their coins as quickly as possible, and have argued that Celsius and its founder, Alex Mashinsky, touted that customers would retain control over their deposits. The immediate impact of a ruling in favor of Celsius would be to allow the company to sell $18 million in stablecoins to fund the expenses for a longer stay in chapter 11. But the firm’s request to sell those stablecoins turns on a more fundamental legal question: What rights do crypto banks, brokerages or exchanges have over their customers’ coins? Ownership rights are spelled out in each firm’s terms of use that customers signed on to, often on their mobile devices with just a few clicks. Bankruptcy courts have only begun to unravel what those terms of use mean for the billions of dollars in cryptocurrencies trapped on insolvent platforms like Celsius, Voyager Digital Holdings Inc. and, more recently, FTX.
