Bankrupt cryptocurrency lender Celsius Network is facing more legal issues as disgruntled customers move to demand their funds be returned after the platform froze withdrawals in June .
A group of 64 Celsius escrow account holders filed a lawsuit Wednesday in U.S. Bankruptcy Court for the Southern District of New York seeking to recover their assets
The creditors seek to return a total of $22.5 million in assets they held with Celsius escrow services , according to court documents . The group is represented by Togut, Segal & Segal, a law firm specializing in insolvency matters.
The plaintiffs said Celsius “failed to honor withdrawals from any program,” including escrow services. According to the complaint, this violates the simple wording of the debtor’s terms of use, which originally stated that the assets in custody “belong to the user forever.”
According to Celsius’ terms of use, the rights to any digital assets in its escrow wallet “always belong” to the customer and are not transferable to the company.
According to their terms of use last revised in April this year, they stated: “ Celsius will not transfer, sell, lend or otherwise re-mortgage eligible digital assets held in escrow wallets unless expressly instructed, unless a valid court order, Competent regulatory agency, government agency, or required by applicable law.”
As the cryptocurrency market continues to be in a bear market and the cryptocurrency lending industry is experiencing related liquidity issues, Celsius is one of the most troubled cryptocurrency lending platforms that filed for Chapter 11 bankruptcy in July of this year.
Celsius subsequently disclosed that the company had a $1.2 billion shortfall on its balance sheet . Celsius had total assets of $4.31 billion as of July 13, and out of Celsius’ total liabilities of $5.5 billion, more than $4.7 billion was owed to Celsius users.