Cryptocurrency does not sit still. Between the day a Celsius customer withdrew coins and the day a judgment enters against that customer, the value of what was withdrawn can double, collapse, or vanish entirely. That volatility turns an ordinarily mechanical question, what a defendant must return once a transfer is avoided, into a genuinely difficult one. On July 10, 2026, Chief United States Bankruptcy Judge Martin Glenn answered it.

The Memorandum Opinion and Order resolves two questions the parties were directed to brief under a joint scheduling order: whether the Litigation Administrator may recover the transferred digital assets themselves or their value, and, if value, at what point in time that value is measured. The Court declined to pick a single valuation date. It adopted instead a scenario-based framework that keys the measure of damages to the direction the asset moved and to what the defendant did with it.

The framework resolves into a handful of situations. For assets that have depreciated since transfer, the Litigation Administrator recovers the transfer-date value, whether or not the defendant still holds the asset. For appreciating assets a defendant still holds, the Litigation Administrator recovers the asset itself. For appreciating assets a defendant has sold at a profit, the Litigation Administrator recovers the sale price, with the defendant bearing the burden of proving both that a sale occurred and the price it produced; a sale at a loss reverts to the transfer-date value. And for appreciating assets a defendant no longer holds for any reason other than a sale, the Litigation Administrator recovers the judgment-date value. Section VIII sets out the complete framework.

The significance is not the depreciation half of the framework, which follows settled law. It is the appreciation half. The Court observed that it was not aware of another court that has ruled on how to value appreciating digital assets in the context of avoidance actions. A prior matter involving transferred Bitcoin in the Northern District of California came close, but it settled and was voluntarily dismissed before the court rendered a final decision on the proper measure of damages. This opinion fills that gap for the thousands of Celsius customer avoidance actions that follow it, and it supplies the first reasoned template for the next crypto estate that has to litigate the same problem.

Celsius Network and its affiliates filed for Chapter 11 on July 13, 2022. The Court confirmed a modified plan in November 2023, and the plan went effective on January 31, 2024, at which point distributions to creditors began. The avoidance litigation that produced this opinion runs on two tracks, and understanding the opinion requires keeping both in view.

The first track is the insider proceeding. In July 2024, the Litigation Administrator sued the company's former directors and executives, asserting claims that included breach of fiduciary duty, avoidance and recovery of preferential and fraudulent transfers, fraudulent misrepresentation and violation of state consumer protection laws, and equitable subordination. Three entities named in that suit, Koala1 LLC, Koala3 LLC, and AM Ventures Holding, Inc., never answered. The Litigation Administrator moved for default judgment against those three, and the entries of default gave the Court a set of defendants whose liability was already established. That detail matters, because it is what made the damages question ripe.

The second track is the customer proceeding. Also in 2024, the Litigation Administrator filed thousands of avoidance actions against former Celsius customers, seeking to claw back transfers those customers received in the 90 days before the Petition Date. To manage that volume, the Court entered streamlined procedures and structured the litigation so that group-wide legal questions could be decided once rather than thousands of times. The damages framework is one of those group-wide questions.

Section 550(a) provides that, to the extent a transfer is avoided, the trustee may recover for the benefit of the estate the property transferred, or, if the court so orders, the value of that property. The purpose of the provision, as the Court restated it, is to restore the estate to the financial condition it would have enjoyed had the transfer never occurred. That restorative aim is the fixed point around which the entire analysis turns.

The statute grants a choice between the property and its value, but it does not say when a court should order one rather than the other, and it does not say as of what date value is measured. Both gaps are left to the court's discretion. In deciding whether to order turnover of the property or a money judgment for its value, the Court applies three familiar factors: whether the value of the property is contested, whether it is readily determinable, and whether it has been diminished by conversion or depreciation.

Two structural rules bound the analysis. First, the recovery must benefit the estate, language the Customer Defendants would later try to leverage. Second, the estate is entitled to only a single satisfaction. The Litigation Administrator may recover the transferred assets or their value under the framework that follows, but not both from the same defendant.

Against that backdrop, the scheduling order posed two questions. The first asked whether the Litigation Administrator is entitled to recover the transferred digital assets when they remain in a defendant's possession, custody, or control, or, alternatively, their value. The second asked, if value is the measure, what value applies when the assets have appreciated since transfer and what value applies when they have depreciated. The first question sorts defendants by possession. The second sorts them by direction of value. The opinion answers both by combining the two sorts.

Before reaching the merits, the Court had to clear an objection. The Customer Defendants argued that any ruling on Section 550 damages would be an advisory opinion, because the measure of recovery in each customer action will ultimately depend on that case's own facts, and because no customer has yet been found liable. Deciding damages before liability, they argued, puts the cart before the horse.

The Court agreed with the premise and rejected the conclusion. It cannot rule on what the Litigation Administrator may recover from any Customer Defendant, because none has been found liable. But the defaulting insider entities are in a different posture. Their liability is already fixed by the entries of default. A dispute over what the Litigation Administrator may recover from those three entities is a real and concrete controversy, not a hypothetical one, and it is therefore ripe. The opinion decides the damages question as to the defaulting insider defendants and no one else.

Two consequences follow. The defaulting insider defendants retain the right to litigate the extent of their liability in a subsequent damages inquest, because a default is not an admission of damages. And the Customer Defendants keep the ability to litigate their own damages issues if and when liability is established against them. The framework supplies the legal principles. It does not resolve any particular defendant's number, and it does not foreclose the fact-intensive arguments that will decide those numbers later.

Where the transferred asset is worth less on the judgment date than it was on the transfer date, the answer is straightforward and well supported. The Litigation Administrator recovers the transfer-date value, and it makes no difference whether the defendant still holds the asset.

The reasoning tracks the restorative purpose of the statute. If a defendant had to return only a depreciated coin, or pay only its diminished current value, the estate would absorb the entire post-transfer decline. That outcome inverts the point of Section 550, which exists to put the estate where it would have been absent the transfer, not to saddle it with a loss the transfer caused. As the Court put it, returning a depreciating asset would thrust the loss incurred entirely onto Celsius's bankruptcy estate.

The proposition draws broad support. The leading bankruptcy treatise notes that depreciation due to market fluctuations may warrant restitution of the property's value as of the transfer date. Courts have applied that measure to a depreciated oil and gas lease, to a yacht destroyed by fire, and to software that had become worthless by the judgment date. The through-line is consistent: when the thing transferred has lost value in the transferee's hands, the estate recovers what the thing was worth when it left.

The hard problem is appreciation. When a coin has gained value since it was withdrawn, three candidate measures compete: the value on the transfer date, the value on the judgment date, and whatever the defendant actually realized if the defendant sold. The Litigation Administrator pressed for judgment-date value across the board, reasoning that the estate would have captured the full appreciation had the coins never left, and that anything less lets the transferee keep a gain the estate should have enjoyed.

The Court did not accept that. It began from the recognition that there is no bright-line rule fixing the date on which avoided property is valued. The only generally applicable principle is that the time at which value is measured depends on the circumstances of each case, and trial courts are given broad discretion precisely because avoidance actions run the range from innocent conveyances to conspiracies to defraud creditors. The timing of the valuation is a tool for reaching an equitable result, not a mechanical rule to be applied without regard to what actually happened.

Discretion here is disciplined by a specific congressional concern. In drafting Section 550, Congress sought to prevent a transferee from taking a wait-and-see posture, holding appreciating property and betting on further gains at the estate's expense. Where a transferee knowingly solicits a vulnerable transaction, the estate should get the benefit of the most favorable recovery. That concern points toward letting the estate capture appreciation. It does not, by itself, tell you at which date to stop the clock.

The Court also rejected the Litigation Administrator's affirmative case for judgment-date value on two independent grounds, each rooted in the same equitable instinct that no party should receive a windfall. First, it is not clear the estate would ever have realized judgment-date value even if the coins had stayed put, and the Litigation Administrator offered no evidence that Celsius would have held rather than sold, hedged, or redeployed them. Second, charging a defendant the current price of an asset the defendant sold years earlier could expose preference defendants to what the Court called essentially limitless liability, tethering their exposure to market swings long after they parted with the coins.

Much of the parties' briefing turned on analogies. The Litigation Administrator leaned on real property cases, where a trustee can usually recover the very parcel that was transferred and thereby capture its appreciation. The Customer Defendants leaned on closely held equity cases, where courts have refused to hand the estate a value that reflects post-transfer changes attributable to the transferee's own efforts. The Court found both analogies unpersuasive, and the reasons it gave define the character of digital assets for avoidance purposes.

The real property analogy fails because it assumes recoverability. A trustee can usually get the parcel back, so awarding the asset itself captures appreciation without unfairness. Digital assets frustrate that assumption. Many Celsius defendants no longer hold the coins they withdrew, having sold or moved them, and the market for crypto is liquid and speculative in a way the market for land is not. You cannot build a damages rule on the premise that the estate can simply take the coin back when, for a large share of defendants, the coin is gone.

The closely held equity analogy fails for the opposite reason. Cases refusing to award post-transfer appreciation did so because the increase reflected the transferee's own work or unforeseen developments, or because the equity carried marketability and minority discounts that made its value contingent on who held it. None of that describes cryptocurrency. A coin's appreciation is a product of market forces, not the defendant's effort, and its price does not change based on whose wallet holds it. The equity cases protect a transferee who built value; they say nothing about a transferee who merely held a liquid asset while the market moved.

Having rejected both a flat transfer-date rule and a flat judgment-date rule, the Court built a measure that varies with what the defendant actually did. The organizing idea is to give the estate the benefit of real, realized gains while insulating defendants from liability that floats on market movements after they have let the asset go. The table below sets out the complete framework, combining the depreciation rule from Section V with the appreciation rules that are the heart of the opinion.

The sale-price rule is the mechanism that resolves the tension. When a defendant sold an appreciated coin, the price the defendant received is the cleanest available measure of the gain that changed hands. It hands the estate a meaningful recovery pegged to the value of the asset as of the date it was disposed of, and it denies the defendant the fruits of any post-receipt speculation. At the same time, it stops the clock at the sale. A defendant who sold in a given year does not remain on the hook for a rally that arrives two years later. That is how the Court answered the limitless-liability concern without giving defendants a free pass on appreciation they actually captured.

The sale-price rule only works if someone can establish that a sale happened and what it produced. The Court placed that burden squarely on the defendant. A defendant who wants the benefit of the sale-price measure must demonstrate both that the transferred asset was sold and the price at which it was sold. A defendant who cannot carry that burden does not fall back to the transfer-date value. The defendant faces the judgment-date value instead.

That allocation is deliberate, and its practical weight is easy to underestimate. The information about a sale, the exchange records, the transaction confirmations, the wallet history, sits with the defendant, not the estate. Putting the burden on the party that holds the proof is orthodox. The consequence of failing to meet it is what makes the rule consequential. In an appreciating market, the judgment-date value will generally be higher than a transfer-date price or an earlier sale price. A defendant who sold coins at a modest profit years ago, but who cannot produce records to prove the sale and its price, is exposed to the current, higher value rather than the smaller sum actually received.

For anyone advising a preference defendant, the instruction is concrete. The transaction record is the asset. Preserving exchange statements and disposition data is not housekeeping. It is the difference between a judgment measured by what the defendant actually received and a judgment measured by a market price the defendant never saw.

The opinion is disciplined about its own reach. Several arguments the Customer Defendants raised were set aside as unproven, unnecessary to the ripe dispute, or simply not before the Court. Reading the framework without reading these boundaries would overstate what has been decided.

The Estate-Recovery and Standing Argument

The Customer Defendants argued that the avoidance actions cannot benefit the estate because creditors have been or will be paid in full, and that recovery yielding no benefit to the estate should not be awarded. They asserted that creditors have already recovered roughly 80 percent of their Allowed Claims, with an additional 900 million dollars in value still to be distributed from sources that include the Tether settlement, the disputed claims reserve, and net assets held by the Post-Effective Date Debtors. They pointed to authority dismissing an avoidance claim for lack of standing where creditors had been paid in full.

The Court did not resolve this. It treated the paid-in-full contention as unsupported by evidence and as an issue not properly before it, and the Litigation Administrator reserved the point for a later stage. The 80 percent recovery figure and the 900 million dollar estimate are the Customer Defendants' assertions, not findings, and nothing in the opinion adopts them.

Jury Rights and Constitutional Authority

The Customer Defendants also argued that determining damages would invade their Seventh Amendment right to a jury and exceed the Court's constitutional authority to enter a final judgment, invoking the line of authority that limits a bankruptcy court's power over certain private-right claims. Those arguments were directed at whether the Court could bind the Customer Defendants. Because the opinion confines its ruling to the defaulting insider defendants, whose liability is fixed by the entries of default, the Court did not resolve the jury-right and constitutional-authority questions. They remain open for the customer actions.

Because the framework was decided for three defaulting insider entities, its application to the thousands of pending customer actions is still prospective, and the measure of recovery against any individual defendant will depend on that defendant's own facts. The observations that follow are offered in that light.

The opinion's most durable contribution may be organizational. It does not announce a single rule so much as a sequence, and the sequence is one other estates recovering appreciating digital assets can borrow. Direction of value comes first. A depreciated asset points to the transfer-date measure. An appreciated asset then sorts by possession: still held toward recovery in kind, sold toward the sale price, other dispositions toward judgment-date value. The sequence does not decide any case, and individualized facts can still move the result, but it gives a practitioner a structured place to start.

For the estate, the opinion reads as a caution against overreach. The Litigation Administrator asked for judgment-date value across all appreciating assets and did not get it, in part for lack of evidence that Celsius would ever have realized that value. A plaintiff drafting a damages theory has reason to anchor it to something the record can support: a transfer-date price, a realized sale, or a current market quote where nothing better exists. Whether another court adopts the same reasoning remains to be seen, but the evidentiary lesson is not confined to these facts.

For the defense, the burden-shifting rule directs attention to the record. In many of these matters, the decisive work will likely precede any legal argument, in the reconstruction and preservation of disposition data. A defendant who can prove a sale at a modest profit stands to convert an open-ended judgment-date exposure into a capped, realized-gain figure. A defendant who cannot is exposed to the higher measure. The distinction turns less on advocacy than on documentation.

The broadest implication warrants the most restraint. This is one bankruptcy court's opinion, and it does not bind other courts; later decisions may refine it or take a different path. Even so, large crypto estates that reach the avoidance stage face the same volatility this Court faced, and until now there was little reasoned authority to consult. The opinion supplies a considered framework, grounded in the restorative purpose of Section 550 and in the economics of digital assets, that distinguishes realized gain from market speculation. It will not settle the question in every forum. It does move the inquiry from whether an estate can recover appreciation toward how a given defendant's facts fit the analysis.