Users’ attempts to remove their funds from the platform have been a rollercoaster since Celsius Network prohibited withdrawals, swaps, and transfers last month. The lending program eventually filed for Chapter 11 bankruptcy this week, following in the footsteps of Voyager, which brought everything to a head.
Users had some hope that they may receive their money back because of this. However, recent court documents indicate that this might not be the case.
Users Can’t Claim Rights Over Their Cryptos
Recent disclosures of proceedings indicate that Celsius Network might not have its consumers’ best interests in mind. The lending company’s bankruptcy attorneys had started to make the case that when consumers deposited their money on the platform, they gave up their legal claim.
This occurred on Monday during the first bankruptcy hearing, and the attorneys supported their assertion with references to the Earn and Borrowed accounts’ terms of service.
The legal representatives contended that since users accepted Celsius Network’s Terms of Service, they granted the platform permission to utilize the cryptocurrency however they saw fit. This included the right to choose whether to sell, use, pledge, or rehypothecate any placed coins.
If this argument is valid, the more than 1.5 million people who have placed their bitcoins on Celsius technically do not own them. The language used in ‘terms of service’ is still mostly restricted to the ‘Earn and Borrow’ accounts.
Who Owns The Cryptos Then?
The Celsius Terms of Service make it abundantly clear that placing coins in the Earn or Borrow accounts gives the platform complete authority over the deposited assets. According to the statement, the title to the coins has been passed to Celsius, who is now authorized to use, sell, pledge, and rehypothecate them.
The tone completely changes regarding the Celsius Custody Program, though. This section of the Terms of Service states that the users retain ownership of the coins and that Celsius will not be permitted to utilize the coins without the customer’s consent.
The results of the current proceedings have aroused discussion over the extent of a user’s responsibility for the provisions of the Terms of Service. It is well known that most individuals don’t read the Terms of Service. Therefore they are unaware of what they agree to while using such sites.
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Even individuals who had cryptocurrency in the Custody program are struggling. Lawyers continue to disagree about the rightful owner of the coins currently in Celsius’ custody—the users or the platforms.
However, this will be a protracted conflict between Celsius, and its consumers is no longer a secret. This might take years to resolve, and even then, consumers might only receive cents on the dollar for their cryptocurrency, depending on the outcome of the Mt Gox procedures.
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