Celsius lawyers claim users waived legal rights to their crypto

Lawyers for the bankrupt crypto lender reaffirmed that user funds essentially belong to the company and not the user, with potentially a major exception.

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The 1.7 million registered users of Celsius in more than 100 countries have relinquished ownership of the crypto they deposited in Earn and Borrow accounts, according to lawyers at the firm.

In Celsius's first bankruptcy hearing on July 18, lawyers from the Pat Nash-led Kirkland law firm detailed how retail users with Earn and Borrow accounts transferred title from their parts to the company in accordance with its Terms of Service (ToS). Accordingly, Celsius is free "to use, sell, pawn and remortgage these coins" as it sees fit.

Celsius Account Terms of Service

< p>However, a legal question has arisen as to whether securities account holders retain ownership of their assets. Celsius ToS claims that the company cannot use coins in custodial accounts without user permission. Still, the lawyers questioned whether that held true for the crypto the company is currently in possession of. In their case overview, they asked:

“Are the crypto-assets in possession of Celsius owned by the estate? Is the answer to this question different for crypto assets held under the Custody program versus the Earn program?”

The Custody program was launched in April for non-accredited US investors as some US states issued cease and desist orders regarding Celsius' Earn program.

Celsius suspended rewards and withdrawals for all users on June 13 and has since suspended margin calls, liquidations, and issuance of new loans.

Lawyer David Silver summarized Celsius' claim to user funds in a July 18 tweet. He wrote that users should "stop thinking of it as *your* crypto" because technically everything belongs to the company.