## Facts

- Celsius Network LLC and affiliates operated a cryptocurrency platform offering, among other products, an “Earn” program that paid yield on customer-deposited crypto.
- Customers deposited cryptocurrency into Earn accounts through an online assent process governed by written Terms of Use.
- Celsius halted withdrawals and filed for Chapter 11 bankruptcy protection in the Southern District of New York.
- In the bankruptcy case, Celsius sought declaratory relief that cryptocurrency in Earn accounts was property of the estate under 11 U.S.C. § 541.
- Customers and other parties objected, asserting the deposited crypto remained customer property and raising contract, consumer-understanding, and equitable arguments (including constructive trust).
- The motion focused on ownership of crypto in Earn accounts; other account types were not fully resolved in the ruling.

## Issues

1. Whether cryptocurrency deposited into Celsius’s Earn accounts became Celsius’s property under the governing Terms of Use and thus property of the estate under 11 U.S.C. § 541(a).
2. Whether the Terms of Use were enforceable and unambiguous under New York contract law as to transfer of title and control of deposited crypto.
3. Whether equitable doctrines (including constructive trust) required treating Earn-account crypto as customer property despite the written Terms of Use.

## Decision

- The court granted declaratory relief in substantial part, holding that cryptocurrency deposited in Earn accounts was owned by Celsius and therefore was property of the Chapter 11 estate under § 541.
- The court interpreted the Earn Terms of Use as transferring to Celsius the customers’ rights and title to the deposited crypto and giving Celsius broad rights to use, pledge, or lend those assets.
- The court concluded Earn customers held contractual claims against the estate rather than property interests in specific crypto assets, characterizing them as general unsecured creditors as to Earn-account balances.
- The court declined to impose a constructive trust or similar equitable remedy on the Earn-account crypto on the record presented.
- The court noted that different contractual language for other account types could support different ownership outcomes and did not finally determine ownership for all account categories.

## Legal Principles

- Ownership of assets for purposes of 11 U.S.C. § 541 is determined by applicable state law; once the debtor holds legal title under state law, the assets enter the bankruptcy estate.
- Clear, unambiguous online terms accepted by users are enforceable under New York contract law and can effect a transfer of ownership of digital assets to the platform.
- Marketing statements or customer expectations do not override unambiguous written terms allocating title and usage rights in deposited assets.
- Constructive trust is an extraordinary remedy that bankruptcy courts apply sparingly because it can disrupt the Bankruptcy Code’s distribution scheme and elevate one creditor group over similarly situated creditors.

## Conclusion

The bankruptcy court determined that, under the Earn program’s Terms of Use, customers transferred ownership of deposited cryptocurrency to Celsius, making those assets property of the Chapter 11 estate and leaving Earn customers with unsecured contractual claims rather than ownership rights in specific crypto.


In re Celsius Network LLC, 647 B.R. 631 (Bankr. S.D.N.Y. 2023)