US Crypto Platform Attempting Clawback from Indian Users After Bankruptcy

8 months ago

Hello everyone, I'm an Indian citizen seeking legal advice on a rather unique situation involving a US-based cryptocurrency lending platform called Celsius Network.

Some context: Celsius filed for bankruptcy in July 2022. I was an user who had withdrawn a significant amount of crypto assets from the Celsius platform in the 90 days preceding their bankruptcy, during a period of major market turmoil and uncertainty around the platform's solvency.

Recently, the litigation administrator overseeing the Celsius bankruptcy proceedings has issued a settlement demand to me and other Indian users by Email, claiming that our withdrawals in the 90-day period constituted "preferential transfers" under US bankruptcy laws. They are attempting to "clawback" or recover those withdrawn funds from us.

The settlement offer currently gives us a choice to pay 13.75% of the withdrawal amount to settle the claim. However, failure to settle could potentially lead to being sued for the full amount withdrawn.

As an Indian citizen with limited financial means, I have multiple concerns about this clawback attempt:

Jurisdictional Issue - Can a US bankruptcy estate legitimately pursue clawback actions against Indian residents? Would Indian courts enforce such claims over public policy considerations?

Regulatory Lapse - Celsius operated in an unregulated sphere in India without any licensing or oversight. Does this undermine the legal standing of their claims against Indian users?

Consumer Protection - As retail users, we may have lacked full understanding of the bankruptcy risks and legal dense disclosures by Celsius. Are we protected under Indian consumer laws?

Governing Laws - Should Indian personal bankruptcy/insolvency laws supersede the US bankruptcy code in governing claims against Indian citizens?

Financial Hardship - Many Indian users like myself simply do not have the means currently to pay these settlement amounts or hire legal counsel. What recourse do we have?

I'm hoping some of the legal experts on this subreddit can provide guidance on the merits of these issues and what potential defenses, if any, Indian users may have against such a clawback demand from a US entity that operated in a legally ambiguous domain in India.

Any advice on our rights, the relevant statutes/precedents, and the best way to respond to or challenge these claims would be immensely helpful. I'm willing to provide additional details about my specific situation and the documentation received from the Litigation Administrator.

Please let me know if you need any clarification or have suggestions on framing this issue properly from a legal perspective. This is a unique crypto-related matter with potential for creating new precedents, so I'm hoping to gain some insight from the legal community in India. Thank you! (Bangalore, Karnataka)