Bankrupt crypto lender Celsius Network has reportedly sued its former business partner, crypto custodian Prime Trust, demanding the return of $17 million in crypto that the former says the latter still holds.
Celsius Network has alleged that Prime Trust retained some crypto assets after it returned $119 million in assets to Celsius when the two organizations ended their business partnership in June 2021, according to a CoinDesk report Tuesday (Aug. 23).
“Upon 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 said in a bankruptcy filing.
PYMNTS has requested comment from Prime Trust.
Celsius Network filed for Chapter 11 bankruptcy July 13, a month after it had frozen customer accounts, PYMNTS reported at the time.
Read more: Crypto Lender Celsius Files for Chapter 11 Bankruptcy
The company got into trouble by offering big yields to crypto depositors while making big loans that were backed by insufficient collateral, leaving the company vulnerable to a market downturn.
It froze withdrawals, swaps and transfers in June, with a member of the board of directors saying that was necessary to prevent a run and losses to customers.
More recently, the chief financial officer of Celsius Network testified Friday (Aug. 19) that the firm likely has enough funding to keep operations afloat until the end of the year.
During a call with creditors, CFO Chris Ferraro said Celsius expects to be “cash-flow positive at the beginning of 2023,” according to a CoinDesk report. The report noted that the company had previously indicated that it would run out of cash by November.
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