Celsius’s 1.7 million registered users across over 100 countries gave up title to the crypto they deposited into Earn and Borrow accounts, according to the firm’s lawyers.

At the first bankruptcy hearing for Celsius on July 18, lawyers from the Kirkland law firm led by Pat Nash detailed how retail users with Earn and Borrow accounts transferred the title of their coins to the firm as per its terms of service (ToS). As a result, Celsius is free to “use, sell, pledge, and rehypothecate those coins” as it wishes.

Terms of Service for Celsius accounts.

However, a legal question has arisen about whether Custody account holders retain title for their assets. Celsius ToS claims that the firm cannot use coins in Custody accounts without user permission. Still, lawyers questioned whether this holds for crypto that the firm is currently in possession of. In their overview of the case, they asked:

“Are the crypto assets in Celsius’ possession property of the estate? Is the answer to this question different for crypto assets held under the Custody vs. the Earn program?”

The Custody program was launched in April for non-accredited US investors as some states across the US issued cease and desist orders on Celsius’s Earn program.

Celsius paused rewards and withdrawals for all users on June 13 and have since paused margin calls, liquidations, and issuing new loans.

Attorney David Silver summed up Celsius’s claim to users’ funds in a July 18 tweet. He wrote that users should “stop thinking of it as *your* crypto” because it technically all belongs to the firm.

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