Customers of bankrupt cryptocurrency lender Celsius can withdraw their assets from the platform for the first time since June, the company announced Thursday.
The news, which applies to certain custody accounts, follows a January court order authorizing Celsius to process withdrawals.
Affected assets include “pure custody” assets not in any earn or borrow accounts, and “transferred custody” assets moved from earn or borrow accounts at least 90 days prior to the firm’s bankruptcy.
Earn accounts allowed customers to deposit crypto on the Celsius platform in return for up to 18% interest annually, while borrow accounts allowed users to borrow money from Celsius against their own collateralized crypto assets.
The court order limits withdrawals from eligible accounts to 94% of their contents. Additionally, customers who previously transferred funds from an earn or borrow account to a custody account can withdraw 72.5% of their funds, up to a maximum of $7,575.
Hoboken, New Jersey-based Celsius filed for bankruptcy in July 2022. Customers assets have been locked from withdrawal since June, and the company owes its 1.7 million customers approximately $4.7 billion. Celsius was one of the first major crypto companies to file for bankruptcy following the Terra/Luna crash, and its former CEO Alex Mashinsky is in hot water as the subject of a suit by New York Attorney General Letitia James, who alleges that he defrauded hundreds of thousands of investors out of billions of dollars.
The suit, filed in New York Supreme Court in January, alleges Mashinsky misrepresented his exchange’s safety to attract billions of dollars in digital assets from investors. As Celsius hemorrhaged money from risky investments, Mashinsky hid the exchange’s financial condition from those investors, James said at the time.
Celsius was acquired last month by NovaWulf Digital Management, a digital asset investment company based in New York City. Celsius attorney Ross Kwasteniet said at a bankruptcy court hearing that the deal should allow the firm to exit Chapter 11 and begin the process of returning assets to customers in June, according to Reuters.
