If one tech executive gets his way, crypto lender Celsius Network could soon be responding to a flurry of lawsuits from investors who suffered at the hands of the platform’s withdrawal freeze.
British computer scientist and CEO of legal services chatbot DoNotPay, Joshua Browder, suggests investors sue the lender as it faces insolvency. He told CoinDesk TV’s “First Mover” a loophole in Celsius’ terms of service (Section 27 C) gives individual investors the ability to file a claim suit against Celsius Network in small claims court. The claim, however, must fall below a $10,000 threshold, but that may work to the benefit of plaintiffs.
“It’s likely that small claims court judges will side with consumers,” Browder said in reference to an estimated 1,700 pending cases “across the country, in small towns” DoNotPay is working on. He predicts that Celsius will be too preoccupied to deal with individual cases of such small size.
“We believe Celsius isn’t actually going to show up to a lot of these cases … it’s often the case where corporations feel like it’s more expensive to actually hire a lawyer to defend themselves, than it is to get a default judgment against them,” Browder said.
The beleaguered company, he said, “has bigger problems at the moment” than worrying about “if a consumer sues for $5,000 in a rural Colorado town, in their local small claims court.”
DoNotPay, originally built in 2015 to contest parking tickets, has since expanded. Browder said that when the Celsius debacle first erupted, some users wrote in looking for help, saying they had lost their life savings.
“It’s helpful to get the smallest investors at the front of the line. To get paid back,” he said.
Browder said courts will be focused on any disclosures Celsius may have failed to make. “In our opinion, they didn’t disclose the risks,” he said. In addition, Browder added his company is looking into pending withdrawals that were made before Celsius ordered a freeze.
Meanwhile, as retail investors look to find ways to salvage their assets, Browder said that his team is also looking into other cases. It had begun looking at Voyager Digital, he added, but plans were scrapped after the broker filed for Chapter 11 bankruptcy last week.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.