Bankruptcy Judge Says Celsius Crypto Investors Don't Own Their Accounts
Bankruptcy Judge Says Celsius Crypto Investors Don't Own Their Accounts:
A sneaky clause in Celsius' terms and conditions made all investments property of the now-defunct crypto trading platform.
A bankruptcy judge has dashed the dreams of investors hoping to retrieve their crypto funds from Celsius. It turns out, assets placed in the now-defunct crypto exchange's high interest "Earn Accounts" belong to Celsius, not the account holders, according to a Wednesday ruling from Judge Martin Glenn.
The decision came down to an "unambiguous provision" in one section of Celsius' terms of use, wrote the judge. "All right and title to such Eligible Digital Assets, including ownership rights," is held by Celsius, said version 8 of the company's terms, which 99.86% of Earn Account holders agreed to, noted Glenn. Celsius' incredibly shady terms of service also stated to signatories that "you may not have any legal remedies or rights," to get your money back—which the company has previously argued protects them from legal complaints.
Your Crypto Money Might Not Legally Belong to You Anymore, Court Rules
Your Crypto Money Might Not Legally Belong to You Anymore, Court Rules:
The cryptocurrency industry has been busy with the sudden collapse of FTX, one of the top crypto exchanges (banks), for almost two months now. Many people still can't get their money out of FTX, and another ruling is more bad news for people using exchanges.
[...] The ruling shouldn't have a sudden effect across the entire industry — it's a ruling about one specific company's terms of service, not a court decision or new law about all crypto companies and exchanges. However, it's possible the terms of service for other crypto exchanges could be interpreted in a similar way. In the United States, the Federal Deposit Insurance Corporation (FDIC) generally protects money stored in traditional (fiat) banks, but there's no regulation like that in place for crypto exchanges operating in the US.
The bankruptcy proceedings for Celsius is another indicator your money probably isn't safe in any crypto exchange. FTX, formerly one of the world's most popular crypto exchanges, is still undergoing bankruptcy and reorganization. The process revealed that much of FTX's funds (including customer money held in the exchange) was provided to sister trading firm Alameda, and FTX itself eventually became insolvent. The sudden collapse of FTX has had a ripple effect, causing a few other high-profile crypto companies to collapse — mostly from holding vast reserves of FTX's crypto token (which is now mostly worthless).
(Score: 2) by canopic jug on Sunday January 08, @07:41PM (1 child)
Cryptography [cr.yp.to] aka crypto,
or Cryptocurrencies aka scam?
Money is not free speech. Elections should not be auctions.
(Score: 2) by mcgrew on Sunday January 08, @09:54PM
To anyone not cognizant about technical terms, what they call "technobabble", crypto is bitchcoin, e.g, AKA Ponzi. That's almost everybody but us.
Carbon, The only element in the known universe to ever gain sentience
(Score: 5, Insightful) by sjames on Sunday January 08, @07:55PM (8 children)
Aren't judges supposed to ignore unconscionable terms in a contract of adhesion? Essentially treating "deposits" as gifts would seem to be such a term.
(Score: 2) by corey on Sunday January 08, @08:28PM
Yeah that’s what I thought but IANAL. I thought it came down to reasonableness as well. Maybe the lawyers representing the investors will go this way now.
(Score: 2) by aafcac on Monday January 09, @12:02AM (1 child)
The issue is that they often have an impractical definition of unconscionable and similar terms. Often the rulings assume that everyday people can afford hundreds of dollars in legal fees everyday a contract if presented to them not to mention all the times where all options for an essential service have these same abusive terms.
(Score: 2) by sjames on Monday January 09, @10:25PM
That seems to be a big blind spot for legislators and judges alike. More generally they seem blind to the cost of a lawyer for the average peoson and the impracticality of engaging one for every metric assload of boilerplate that gets shoved under their noses just to get utilities or buy software, or any significant purchace.
Even practicing lawyers will sometimes admit to not actually reading all that crap.
Likewise they are blind to the intrinsically punitive nature of being hauled away and held in jail either for 24 hours, or awaiting trial. Also the cost of a defense attorney. Costs you don't typically get back if you are found not guilty or even actually innocent. All of that can be ruinous even for the middle class and certainly for the working poor.
All of that is even before you get to the deplorable state of affairs where someone is held longer awaiting trial than the maximum sentence if they are found guilty on all counts. Or "questioning" that would actually be a war crime if done to an enemy combatant.
(Score: 1) by khallow on Monday January 09, @01:37AM (1 child)
The clause is clearly abusive (the signer gifts Celsius this blob of money and gets the inability to sue them in exchange? What a deal!), but the investment was similarly clearly ridiculous. It appears that Celsius was promising returns that were obviously unsustainable. I guess courts take a dim view of people who try that hard to lose their money.
(Score: 2) by sjames on Monday January 09, @10:51PM
The courts have a habit of screwing over people owed relatively small amounts of money in bankruptcy even if it's a huge amount to the person owed. Meanwhile, the relatively larger debts get made whole even if the company owed sees it as petty cash.
It's shameful really.
(Score: 2, Insightful) by anubi on Monday January 09, @11:38AM (2 children)
After reading this thread, I will think a lot harder about signing anything as a condition to purchase anything.
Any more of these pages of legalese presented to me will be responded to by me immediately putting the pen down and not signing anything until they agree to pay for my lawyers fee for reading it, payable in advance, and due whether I accept the offer or not.
The risk of blind signing of paperwork just to move the sale along is getting too risky. Presentation of that kind of paper should be seen like presentation af an unknown substance, which may be worse than poison, which must be consumed before the salesman will close the sale
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by PiMuNu on Monday January 09, @04:54PM (1 child)
Good luck getting a cell phone, contract with your ISP, water company, electric company.
(Score: 1) by anubi on Tuesday January 10, @12:33AM
Understood. In that case, I had to comply.
Now, for more unimportant things like buying a car, I bought from a private individual, cash sale, and seller was very open and cooperative over letting me and my mechanic friend examine the machine ( in his presence, of course ).
I only had to sign thre pieces of paper...the title transfer to inform the DMV,, and my check, which was done at my bank, witnessed by bank cameras. At the teller's station as she transferred the requisite funds.
After title transfer, he drove me in what is now legally my van, to my insurance agent, for adding to my policy. Another check. I drove him home. Done deal.
I try like the Dickens to avoid being compelled to sign business crap.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 0) by Anonymous Coward on Sunday January 08, @08:17PM (8 children)
Aren't banks accounts like this, too? The money's the banks, the "account" IOU is all yours, and you might be able to get your cash back, unless the bank needs a "bail in".
(Score: 2) by choose another one on Sunday January 08, @08:50PM (3 children)
Pretty much (depending on exactly where you are and the laws in place)
See e.g.: https://www.sgrlaw.com/does-the-money-in-your-bank-account-really-belong-to-you/ [sgrlaw.com]
Bank terms and conditions may be constrained by laws in the jurisdiction they are in, and some places have deposit protection laws which mean the government (or some central bank fund) is on the hook if the bank can't give you your money. There are typically limits, business accounts often get less (or no) protection, offshore / tax-haven accounts also. However even in places with pretty good consumer protection (e.g. EU/UK law) banks can still legally close and/or freeze your account for a whole bunch of "reasons" (pretty much whenever they feel like it) and then make very difficult / time consuming to get your money back.
I have multiple bank current accounts and multiple credit cards (actually I used to have multiple credit cards - but one provider recently closed all card accounts because they felt like it...) - for no other reason than "in case".
(Score: 4, Interesting) by Rosco P. Coltrane on Sunday January 08, @09:39PM (2 children)
There's a big difference: however legal, if a bank started to do this sort of shenanigans, it would land them a lot of bad press pretty quickly. It would also attract the attention of the regulator on them in short order.
That's because people are pretty much forced to have a bank account and use banking services these days. So the banks tend to be really careful with what they do, even thought they may legally be able to do it.
The next step down is pseudo-banks like Paypal: they're not banks at all and they haven't shied from fucking account holders over repeatedly and without explanation in the past. It does tend to raise a stink, but not enough to get the feds involved since they're not banks and they're not FDIC-insured.
And then of course at the bottom of the barrel is the crypto-scams. Nobody's crying over cryptocurrency investors getting their comeuppance: they played, they lost. Tough cookie...
(Score: 2) by krishnoid on Sunday January 08, @09:59PM
Maybe they could have had set up an AI to perform that role, but on the wild cryptocurrency frontier, that's still a lot of mumbo-jumbo [youtu.be].
Seriously, though, regulators have been around long enough in the banking world that I bet a lot of depositors thought it was just the way deposits were universally handled, or that you couldn't even become incorporated and/or do business unless there were some legal interlocks in check for allowing people to get their deposits out. It's a great teachable moment from "It's a Wonderful Life" as well.
(Score: 2, Interesting) by Coligny on Monday January 09, @02:12AM
Well… pretty sure those canadian freedom truckers would like to know more aboot this…
(Score: 2) by Beryllium Sphere (r) on Sunday January 08, @10:21PM
Your checking account is on the bank's books as a liability. Borrowers don't always pay things back, but it's not their property.
(Score: 4, Interesting) by Opportunist on Sunday January 08, @11:02PM (2 children)
Well, I do not know about the US, in the EU, banks need to be member of a DGS [europa.eu] that ensures that no matter what happens to a bank, you will get at least 100,000 Euros of your account back (of course, if you have less, you only get that, you can't make bank on a bank crashing down).
That whole thing is currently being tested with the European branch of the Russian Sberbank (the bank has its headquarters in Austria, thus the top of the link [sberbank.at] is in German, scroll down for the English text) which went into liquidation last year after it was cut off from the SWIFT system along with its main branch. Now, I'm not a customer of Sberbank, but from what I can see it seems they got even more than the 100 grand out of that deal, so I guess the system works.
(Score: 3, Informative) by NotSanguine on Monday January 09, @02:08AM (1 child)
The U.S. equivalent is the FDIC [fdic.gov].
But Celsius isn't a bank and so isn't covered by those protections.
No, no, you're not thinking; you're just being logical. --Niels Bohr
(Score: 3, Informative) by Opportunist on Monday January 09, @10:53AM
This is correct. But I answered someone asking
And the answer to this is "no".
(Score: 2) by Opportunist on Sunday January 08, @10:57PM
If you think that's going to give us some surprised Pikachu faces, just wait 'til they learn that they don't own anything else either.
(Score: 1) by dwilson98052 on Sunday January 08, @11:04PM
...that their C level management are all still alive.
Don't get me wrong, I don't wish harm on anybody, I'm just surprised that once of their angry dimwitted "investors" hasn't offed them yet.
(Score: 1) by Runaway1956 on Sunday January 08, @11:40PM (1 child)
https://www.youtube.com/watch?v=8fvTxv46ano [youtube.com]
Abortion is the number one killed of children in the United States.
(Score: 2) by number11 on Monday January 09, @01:36AM
Wants me to "sign in to confirm your age, this video may be inappropriate for some users". No thanks, don't need nudie economics.