IF YOU CANNOT HOLD IT, YOU DO NOT OWN IT: Bankruptcy Judge Rules In Favor of Crypto Thieves & Ponzi Schemes

Celsius Network's bankruptcy might have just set a precedent in determining what crypto assets belong to whom when stored on a centralized platform.

The judge in a 45-page written decision on Wednesday concluded that the deposits in the lender's yield-bearing Earn accounts belong to the estate — that is Celsius — and not the individual holders of those accounts.

Why it matters: Celsius had 600,000 accounts in its Earn program when it filed for Chapter 11 mid-2022, which collectively held roughly $4.2 billion in assets as of July 2022.

Part of that included stablecoins then-valued at around $20 million. All of that is property of the estate, or Celsius.

Investors with Earn accounts have been and remain creditors of Celsius. That means Celsius still owes them. Exactly how much they'll recover, is the unknown.

Crypto platforms' Terms of Service could be central to how other bankruptcy proceedings shake out.

Judge Martin Glenn in his decision said the issue of ownership is "a contract law issue."

"The Court finds that there was a valid contract between Celsius Account Holders and Celsius and that the contract terms unambiguously transferred all right and title of digital assets to Celsius," the decision reads.