Celsius users concerned over personal info revealed in bankruptcy case

Crypto lending platform Celsius filed for Chapter 11 bankruptcy on July 13, 2022. Although the Celsius case involves digital assets, it remains subject to United States Bankruptcy Code under the Bankruptcy Court for the Southern District of New York. 

While this may be, a series of unusual events have ensued since Celsius filed for bankruptcy. For instance, Chief United States Bankruptcy Judge Martin Glenn — the judge overseeing the Celsius case — stated on Oct. 17 that the court will look abroad for guidance.

Glenn specifically mentioned that “Legal principles that are applicable in the United Kingdom are not binding on courts in the United States,” yet he noted that these “may be persuasive in addressing legal issues that may arise in this case.” While the treatment of the Celsius case will abide by U.S. bankruptcy laws, Glenn still aims to determine how the Celsius case should be handled.

Additionally, publicly available court documents related to Celsius’ bankruptcy proceedings have revealed personal data from thousands of the platform’s customers. A large financial disclosure form filed on Oct. 5 contains customer names, account balances, timing of transactions and more.

While this may have come as a shock to Celsius users, releasing this information is subject to U.S. Bankruptcy Code. Adam Garetson, general counsel and chief legal officer at WonderFi Technologies, a regulated cryptocurrency exchange based in Canada, told Cointelegraph that bankruptcy proceedings should be open, public and transparent:

“It is a strong way of avoiding any suggestion of impropriety by the courts and the persons and entities involved in the proceeding. As such, courts can make requests and impose orders on the bankrupt entity, including with respect to release of information which is available publicly.”

Yet, it is unusual that committee investigations have revealed such a large amount of customer information. This point was highlighted in an article from The National Law Review published on Oct. 18, which states, “Debtor filings and Committee investigations have revealed a great deal more to the public about the Debtors’ financial affairs, insider activity, and the path and direction of the bankruptcy case.” The article also states that even though so much personal information has been disclosed, “there is still little indication of how claims will be treated and repaid in this case.” 

Celsius users face unintended consequences

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