Custody and cash · 35 / 127 · 2 min

Rehypothecation

The firm lent the coins you deposited. Your balance is still on the screen. The coins are in someone else's trade.

A worked case

A firm pays a reward for deposits and the terms allow it to use them. The borrower does not return them. The app shows the deposit in the morning. Withdrawals do not leave. The reward had been the rent on a loan the customer did not know they had made.

The use

A terms page can allow the firm to use customer assets. Lending them, pledging them, or trading them is the firm spending what you thought was parked.

The screen

The account still shows the number. The number is a claim. If the borrower fails, the claim stands in a queue.

The deposit was the loan

Celsius took customer coins, paid a reward, and used the coins in lending and trading. In June 2022 withdrawals stopped. The app could still show a balance. In July the firm filed for bankruptcy. Customers became creditors. The reward had been the price of handing over the use of the coins.

The sentence that matters is the one that allows the firm to use the deposit. If you cannot find it, you do not yet know whether the balance is parked or lent.

Read it yourself

• Celsius Network

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

Apply the check

Open a question. The line is about this topic. It is not a verdict that anything is safe.

Check yourself

Write it in your own words. The course's answer opens after that. Nothing is sent.