The hearing came just hours after Celsius‘ attorney filed a petition with the US Bankruptcy Court for the Southern District of New York requesting authority to withdraw funds and suspend certain custodial accounts. This request will not be resolved until the October 6 hearing, but various parties still provided feedback for a substantial portion of the three-hour hearing.
The move shows Celsius understands that the funds are not part of the property, meaning they should be left to escrow account holders. Its assets in the Earn and Loan programs are the property of the property according to the terms of service.
Celsius said the company has yet to complete the necessary analysis to understand whether certain custody customers, such as those who transfer funds from its Earnings and Credits programs, are eligible. Celsius described current, narrowed demand as “phase one” and said they would try to release all funds in the future.
What’s in a name?
Judge Martin Glenn also considered whether to correct the information about Celsius’ creditors, but ultimately decided at the hearing on 14 September. Celsius’s attorney is trying to remove all identifiable information from the public file, but Glenn has made it clear that he is against the idea of allowing creditors to be completely anonymous.
“I will not allow the claim to be proven anonymously, I can tell you right now,” he said.
Usually, creditors need to be identified before they can be claimed, but Celsius argues that disclosing this information could leave its customers vulnerable to cyber threats because the case is heavily featured in the crypto industry, where hacks and digital theft are rampant.
Celsius would have voluntarily preferred that creditors voluntarily disclose this information to prove their claims in court, rather than having this information automatically on a public file, as in the case of bankruptcy.
Glenn also approved an interim motion on cash management, but bigger questions about cash management, including the security and storage of assets, will be raised on Oct. Celsius announced that it will get back another $61 million from a loan due to a technical issue, allowing the funds to be returned in cash rather than stablecoins as originally thought.
Glenn also approved the sealing of certain parties that had signed confidentiality agreements during the bidding process and an extension for Celsius to file their schedules and statements.