Celsius Was In Control Of Roughly 80% Of The Money Deposited On The Platform, Not The Users.
Celsius Network has filed for Chapter 11 bankruptcy protection after deliberating for nearly a month. Following the first bankruptcy hearing on July 18, the legal team for Celsius is now said to have suggested a novel concept to avert a complete collapse: claiming ownership of users’ monies. not the users’, were at its disposal.
This line has been repeated ad nauseam ever since the MtGox days years ago. Sadly, it appears that this warning was again placed in the right position. Insinuating that Celsius was more of an unregulated bank than an asset management, experts warned a few days ago that investors might walk away from the court proceedings with nothing.
“Celsius is not an asset manager, it’s a shadow bank. And deposits in banks aren’t even “customer assets,” let alone “assets under management. Celsius’s terms of use make it completely clear that customers who deposit funds in Celsius’ interest-bearing accounts are lending their funds to Celsius to do with as it pleases. And it specifically says that in the event of bankruptcy, customers might not get all – or indeed any – of their money back.”
This forecast was quickly realized in the outside world. The company’s attorneys contend, in accordance with court filings, that a large portion of the money customers deposited on the platform was in fact at Celsius’ disposal and not their own.
Three crucial business segments have been established for the company’s retail operations: the Earn Program, the Borrow Program, and the Custody Program. Only the final one of these states that the user who made the deposit has full control over the funds they have put.
Unfortunately for users, only 4% of all deposits on the platform are made in the custody portion. The Earn program accounted for a massive 77% of all deposits, making it the most popular.
For the users, what does this mean? Therefore, according to the platform’s Terms of Use, “title to coins is transferred to Celsius, and Celsius is entitled to use, sell, pledge, and rehypothecate those coins.”‘
Attorney David Silver, who attacked the company’ defense and the company’s reluctance to clearly define itself as a type of financial entity or other, provided a helpful explanation of the underlying legal language on Twitter. He noted the company’s pivot towards allegedly redefining itself as more of a Bitcoin mining entity than anything else.
The court has not yet made any comments regarding the company’ claims in the most recent bankruptcy filing.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Celsius Was In Control Of Roughly 80% Of The Money Deposited On The Platform, Not The Users.
Celsius Network has filed for Chapter 11 bankruptcy protection after deliberating for nearly a month. Following the first bankruptcy hearing on July 18, the legal team for Celsius is now said to have suggested a novel concept to avert a complete collapse: claiming ownership of users’ monies. not the users’, were at its disposal.
This line has been repeated ad nauseam ever since the MtGox days years ago. Sadly, it appears that this warning was again placed in the right position. Insinuating that Celsius was more of an unregulated bank than an asset management, experts warned a few days ago that investors might walk away from the court proceedings with nothing.
“Celsius is not an asset manager, it’s a shadow bank. And deposits in banks aren’t even “customer assets,” let alone “assets under management. Celsius’s terms of use make it completely clear that customers who deposit funds in Celsius’ interest-bearing accounts are lending their funds to Celsius to do with as it pleases. And it specifically says that in the event of bankruptcy, customers might not get all – or indeed any – of their money back.”
This forecast was quickly realized in the outside world. The company’s attorneys contend, in accordance with court filings, that a large portion of the money customers deposited on the platform was in fact at Celsius’ disposal and not their own.
Three crucial business segments have been established for the company’s retail operations: the Earn Program, the Borrow Program, and the Custody Program. Only the final one of these states that the user who made the deposit has full control over the funds they have put.
Unfortunately for users, only 4% of all deposits on the platform are made in the custody portion. The Earn program accounted for a massive 77% of all deposits, making it the most popular.
For the users, what does this mean? Therefore, according to the platform’s Terms of Use, “title to coins is transferred to Celsius, and Celsius is entitled to use, sell, pledge, and rehypothecate those coins.”‘
Attorney David Silver, who attacked the company’ defense and the company’s reluctance to clearly define itself as a type of financial entity or other, provided a helpful explanation of the underlying legal language on Twitter. He noted the company’s pivot towards allegedly redefining itself as more of a Bitcoin mining entity than anything else.
The court has not yet made any comments regarding the company’ claims in the most recent bankruptcy filing.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
Patrick
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