NEW YORK - Celsius Network, the bankrupt cryptocurrency lender, is seeking to give coins back to a sliver of users who are locked out of their accounts.

The company asked for a United States bankruptcy judge's permission to release about US$50 million (S$70 million) worth of cryptocurrency stuck on the platform in so-called custody accounts, which were designed to store digital assets rather than generate returns. A full hearing on the request is set for Oct 6, according to court papers.

The move highlights a split among the many thousands of users burnt by the company's bankruptcy. Those who deposited crypto with the goal of earning interest on their holdings signed over their ownership of the coins to Celsius, according to the company, while those who only stored their assets on the platform technically retained title to the coins.

The roughly US$50 million that Celsius is seeking to return now is just a fraction of the more than $200 million trapped in custody accounts on the platform. This is because many users shifted their holdings from interest-bearing accounts into custody arrangements shortly before the bankruptcy, which may allow Celsius to assert ownership over the coins, a lawyer for Celsius told US Judge Martin Glenn in a Thursday hearing.

The custody accounts also make up just a tiny slice of the crypto that users have not recovered from Celsius. The market value of assets in so-called earn accounts totalled about US$4.2 billion as at July 10, according to court papers. BLOOMBERG