Key Takeaways
- Prime Trust held approximately $119 Million of Celsius’ assets when both the firm ended their contract in June last year.
- In August, Celsius sued Prime Trust for “refusing to fulfill its obligations to transfer” 398 BTC, 196,268 CEL tokens, 3,740 ETH, and 2.2 million USDC that it valued at $17 million.
On Thursday, leading crypto service provider Prime Trust agreed to return $17 million in tokens to troubled crypto lender Celsius Network in a bankruptcy court hearing. Prime Trust held approximately $119 Million of Celsius’ assets when both the firm ended their contract in June last year.
Prime Trust ended its relationship with Celsius in June 2021, citing “red flags”. Later in August 2022, Celsius sued Prime Trust for allegedly “refusing to fulfill its obligations to transfer” 398 BTC, 196,268 CEL tokens, 3,740 ETH, and 2.2 million USDC that it valued at $17 million.
According to Celsius, Prime Trust acted as crypto custodian for New York- and Washington-based users from 2020 through mid-2021, returning $119 million in crypto following the end of the business arrangement but holding back certain funds.
“Upon the commencement of these bankruptcy proceedings, Prime Trust was obligated under the Bankruptcy Code to deliver all property belonging to Celsius that is in Prime Trust’s possession to Celsius, including these remaining crypto assets, and should be ordered to turn them over now pursuant to section 542 of the Bankruptcy Code,” Celsius had argued in its August filing.
Celsius’s legal team stated that Prime Trust ” withheld wrongfully Subject Property that Celsius has directed Prime Trust to release.” The assets will be sent to a designated Celsius wallet, Prime Trust stated. The assets will be held in a separate account until the court finds a way to distribute Celsius’ assets.
Celsius filed for Chapter 11 bankruptcy protection in July and owes its creditors billions of dollars. Celsius’ spiral into bankruptcy was triggered by the crash of TeraLUNA and the fall of Three Arrow Capital (3AC), a crypto Hedge Fund.
There were also media reports that stated the company saw a range of internal missteps leading up to its recent turmoil. As of May, Celsius was one of the leading players in the crypto lending space, with over $8 billion in loans to clients and approximately $12 billion in assets under management.
