Celsius Network LLC’s recent customer agreements were clearer than earlier versions of its terms of use about whether customers were handing over ownership of their coins when they made deposits into the firm’s high-interest Earn accounts, according to the bankruptcy judge overseeing its chapter 11 case, WSJ Pro Bankruptcy reported. Judge Martin Glenn of the U.S. Bankruptcy Court in New York made the remarks at a hearing Monday over a legal issue in the Celsius case that could also affect millions of customers of other bankrupt crypto platforms: What rights do crypto banks, brokerages or exchanges have over their customers’ holdings? Celsius is asking for a court decision backing its rights to use its customers’ crypto, including to sell stablecoins worth $18 million to fund a longer stay in bankruptcy. Judge Glenn said that he expects to rule on the matter next week or later and listened to arguments from lawyers for Celsius and customers, as well as several customers who spoke for themselves, state regulators, and a Justice Department watchdog. Celsius updated its terms of use eight times between 2018 and September 2022, asking customers to accept changes each time by clicking on online forms that popped up, usually on users’ mobile devices. “Versions one through five are less clear to me on the issue of ownership. Version six was clearer,” Judge Glenn said from the bench. The agreements gave Celsius the right to unilaterally update the terms of use, and continued use of the Celsius app was treated as acceptance of revised terms, according to a court filing by Oren Blonstein, the company’s chief compliance officer. The firm made significant efforts to get customers to accept the sixth version of the terms launched in July, sending emails and then threatening to cut off interest earnings and later suspending access to the platform for users who didn’t sign off, according to Mr. Blonstein’s filing.
