Paxful is set to compensate all affected Earn program participants with its own funds.
Peer-to-peer crypto marketplace Paxful revealed that all Earn program participants who lost funds due to the Celsius Network collapse will be made whole.
The news came after a US court ruled that the Celsius Earn account assets belonged to Celsius, not its depositors.
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The decision to refund the Earn program participants was announced on Twitter by Paxful CEO Ray Youssef.
In reply to a question about how much would the whole refund cost, Youssef revealed that it was 8.8 Bitcoin (BTC), which is around $252,252 at current prices. The peer-to-peer marketplace plans to release funds by the end of this week.
The Paxful Earn program was launched in partnership with Celsius. It allowed customers on Paxful to earn interest on their crypto holdings. When Celsius collapsed, over 600,000 profitable accounts were cut off from their funds.
The Paxful CEO said the company decided to compensate users after it became clear that only direct depositors of Celsius would receive compensation. Anyone from companies like Paxful would not receive a dime.
Ray Youssef said he regretted adding the “scammy” APY services, highlighting that it wasn’t his decision. On top of that, Youssef promised to release more details later.
My apologies go out to everyone. We never should have added any of these scammy too good to be true APY services. It was not my decision and we have been under constraints you wouldn’t imagine. All shall be revealed soon. I will always do the right thing no matter how hard.
When Celsius filed for Chapter 11 bankruptcy on July 14th, it left thousands of depositors’ funds in limbo. Neither the company nor its CEO, Alex Mashinksy, publicly discussed the fate of the deposits. User deposits comprise mostly of the defunct crypto lender’s liabilities of $4.72 billion.
Bankruptcy proceedings are ongoing. Recently, a settlement plan allowed some account holders to recover up to 72.5% of their holdings on the platform.