Lawyers for bankrupt lender Celsius are seeking to claw back $7.7 million from the estate of rival Voyager, as judges wrangle over the exact legal status of Celsius’ assets.
The U.S. bankruptcy code allows clawback of transactions that took place up to three months before Celsius filed for Chapter 11 bankruptcy on July 13, documents filed in a court in the Southern District of New York in the early hours of Wednesday morning said.
“Voyager maintained Earn accounts with Celsius, which earned significant rewards for its users,” the filing said, citing Voyager transactions of $7.7 million between Celsius accounts, of which $5.9 million was withdrawn, during the crucial 90-day period. “Section 547 of the Bankruptcy Code allows Celsius to claw back that cryptocurrency.”
Other withdrawals and transfers could also be subject to challenge, Celsius said, but added that the figure was still small in Voyager’s total pool of $1.85 billion in unsecured claims.
Voyager itself had filed for bankruptcy July 5, and claims against the company were supposed to be filed by Oct. 3. But Celsius is begging for a deadline extension – saying that it had been too preoccupied with its own legal case, and that Voyager had sent its legal notice to an out of date address for Celsius’ U.K. arm.
On Dec. 8, Martin Glenn, overseeing the Celsius case, ordered $50 million worth of crypto held in Celsius’ “Custody” program to be returned to customers, and on Tuesday approved the sale of Celsius’ self-custody platform GK8 to Galaxy Digital as he winds up the estate.
But Glenn still needs to decide whether funds from other kinds of Celsius account now belong to the company or its clients, including the interest-bearing “Earn” and transitional “Withhold” accounts used by Voyager.
Preparing documents for the Celsius legal case “was uniquely challenging because it is one of the first ever crypto bankruptcies, and there is a lack of precedent,” the Wednesday filing said.