A US bankruptcy judge orders Celsius to return $50M of crypto deposits in non-interest bearing custody accounts, pending a decision on interest-bearing accounts
US Bankruptcy Judge Martin Glenn ordered Celsius Network LLC to return cryptocurrency that never touched the lender's interest-bearing accounts to its customers.
Context & Ripple Effects
The custody-account order established an early dividing line in Celsius’s bankruptcy: assets kept outside the yield program were treated differently from deposits used in it. That distinction was reinforced weeks later when the court held that yield-account deposits belonged to Celsius, not their individual holders.
The split became central to the case’s resolution path, including a custody-holder settlement and the later plan to return most deposits while moving Celsius into a mining-and-staking-focused successor company.
First-order effects
- Celsius must return $50M in crypto held in non-interest-bearing custody accounts, giving those customers an immediate route to recovery while interest-bearing account holders remain unresolved.
- The ruling preserves Celsius’s ability to retain the disputed yield-account assets pending the separate ownership decision.
Second-order effects
- The account type becomes the key determinant of creditor treatment: the later yield-account ruling puts those customers’ claims against Celsius’s estate rather than claims to segregated crypto.
- Celsius’s restructuring must allocate recoveries across account classes, a distinction reflected in the later custody-account settlement process.
Third-order effects
- If replicated in other crypto insolvencies, customer recovery will turn less on the asset deposited than on whether platform terms placed it in custody or an interest-generating program.
- The Celsius case points toward crypto lenders’ account design and disclosures becoming central to how bankruptcy estates and customer claims are sorted.
The trend: Crypto bankruptcies are increasingly testing whether platform account terms create a customer custody claim or an unsecured claim on the lender’s estate.