Legal Heat Intensifies Against Celsius Network, users drag Celsius Network to court

The fall in the crypto market over the past few months has weakened the financial position of many firms in this segment. Users holding custody accounts have filed a legal case against Celsius Network, a crypto lending firm filing for bankruptcy. Earlier, the firm’s lawyers had claimed that these users may have to lose their assets.

Custody account users owe the firm about $180 million. CoinDesk’s report states that these users have raised about one million dollars for the legal battle. Lawyers of the firm say that the users holding custody accounts had signed a document to accept the firm’s terms of service that their rights to the crypto assets were terminated. Celsius Network started custody service for non-accredited investors in the US in April. These investors do not get interest like other clients. They use the firm only for the storage of assets.

Celsius Network says bitcoin mining is critical to its restructuring efforts. This US firm has been allowed by a bankruptcy court to spend approximately $41.2 million on a bitcoin mining center. The firm could find a way to pay customers through bitcoin mining. The assets of its customers were frozen before bankruptcy filing.

The firm has incurred a loss of about $1.19 billion. About three months ago, the huge fall in TerraUSD and Luna caused a huge selloff in the crypto market and took a toll on the firm’s lending business. Thereafter, the transactions were closed to rein in the losses. The firm’s decision to freeze transactions is being investigated by some regulators, including the Texas State Security Board. The US Securities and Exchange Commission (SEC) had also sought information from the firm in this regard. It is one of the largest firms involved in crypto lending. It offers interest to customers depositing its cryptocurrencies and lending cryptocurrencies to earn returns.

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