Celsius Users May Have Signed Away Rights to Their Crypto Assets, Lawyers Cite ‘Terms of Service’

Earlier this month, Celsius hired a legal team from the Kirkland & Ellis LLP law firm to assist it in the process of its corporate restructuring.

Celsius Users May Have Signed Away Rights to Their Crypto Assets, Lawyers Cite ‘Terms of Service’

Photo Credit: Facebook/ Celsius Network

As per Celsius’ ToS, Celsius cannot use virtual assets in Custody accounts without user permission

Highlights
  • All crypto assets with Celsius technically belongs to the company
  • Celsius has 1.7 million registered users from over 100 nations
  • Celsius hired a legal team from the Kirkland & Ellis LLP law firm

Users of the Celsius Network may have signed away their own rights to their crypto assets while accepting the platform's terms of service (ToS). As per lawyers representing Celsius, many of the 1.7 million registered Celsius users from over 100 nations have already transferred the title of their assets to the crypto lending firm, that is now free to use, sell, pledge, and rehypothecate them according to its requirements. The users more at risk of having lost their assets are the ones that held Earn and Borrow accounts with Celsius.

Earlier this month, Celsius hired a legal team from the Kirkland & Ellis LLP law firm to assist it in the process of its corporate restructuring.

After having filed for bankruptcy, Celsius lawyers have assembled documents claiming company rights over a group of user assets

As per Attorney David Silver from the SilverMiller law firm, all the crypto assets deposited with Celsius technically belongs to the company itself.

There are however, those Custody accounts on Celsius, assets deposited in which may still be retained by the original owners.

Celsius launched this Custody programme in April for non-accredited investors in the US.

As per the platform's ToS, it cannot use virtual assets in Custody accounts without the permission of the users.

For now, Celsius is aiming at keeping its business afloat somehow given the downturn that the crypto market has taken in recent months.

Meanwhile, the probe on its bankruptcy filing is also underway in the US.

The company could be considering to wait for the industry situation to better itself before selling off assets in its possession and then paying back users with more valued assets, a CoinTelegraph report said.

On June 13, Celsius Network paused withdrawals, swaps, and transfers citing liquidity concerns.

The platform's operational model offered crypto lending against high interest rates to those users who provided liquidity and committed their funds.

Just when the company began to face the wrath of the market slowdown, it also began seeing losses on the large amounts of staked Ether (stETH) it had in its accounts for lending people.

The Celsius Network resorted to laying-off 150 of its workers stationed in the US and Israel — as an immediate cost-cutting measure.

In the last three months, the overall market cap of the crypto sector that stood at over $2 trillion (roughly Rs. 15,610,304 crore) around March, has tumbled down to its current figure of over $914 billion (roughly Rs. 72,62,109 crore).


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Further reading: Cryptocurrency, Celsuis, Crypto Assets
Radhika Parashar
Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More
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