About a week ago, Celsius reached a settlement with Celsius Custody account holders, wherein the latter group could receive a refund of up to 72.5%, half on the spot and half by the end of the year, provided they relinquished their right to further litigation.
Earn Users Left Uncompensated
However, the majority of users did not have Custody accounts. Earn account owners were not promised a refund, as the judge ruled that Celsius’s ToS indicated that customers had given up their cryptocurrency. The only compensation guaranteed to these clients was equity in a new company founded by the deal’s sponsor.
Luckily, for some Earn users, there is a silver lining.
Yesterday, Ray Youssef, CEO of Paxful, announced that he would refund Paxful community members who were also Celsius Earn users.
We have done the right thing and refunded @paxful users who lost funds with Celsius Earn. I could not stand by and watch them suffer, so we’ve made them whole. Our users always come first to me, this is the way! 🧡😇 pic.twitter.com/aQox7qspOh
— Ray Youssef (@raypaxful) March 29, 2023
Refunded from Paxful’s Coffers
Although the overlap between Celsius Earn users and Paxful users is relatively small, the gesture will give some hope to those who had given up on recovering their funds.
It is not clear how many users are involved. However, Youssef confirmed that the total refunded amount would be approximately 8.8 BTC, taken from Paxful’s coffers.
Youssef also apologized to the community for his prior involvement with Celsius via Paxful Earn, stating that he and his company should have known better than to trust the high APY returns promised.
Initially, Paxful staff thought that the bankruptcy deal reached between Celsius and its creditors would include creditors like Paxful Earn, who were linked to the case via third-party contracts. Unfortunately, it became apparent to Paxful quickly that attempting to refund mutual customers from the settlement was a futile effort.
“They kept holding out hope that users may be credited, but the fine print made it clear that only their direct users had that chance, not those coming in from other companies like Paxful. There was no way they would do the right thing for folks from the Global South. We had to step up.”
The news was met with praise from fellow crypto-space entrepreneurs and investors, who commended Youssef for leading by example and prioritizing users. Hopefully, this will inspire other entrepreneurs in similar situations to follow suit.