As Celsius’ bankruptcy proceedings continue, court trustee William Harrington appointed an investigator Thursday to review the company’s finances, according to an application filed on September 29. That same day, securities authorities in Vermont and Texas filed objections to the crypto lender’s access to the company’s stablecoin cache. Fifteen days before the objection, the crypto lender filed documents alleging that Celsius was attempting to access $23 million in stablecoin reserves.
State securities regulators step in Celsius bankruptcy battle
State securities regulators have been very busy with cryptocurrency cases lately, and on September 29, the Texas State Securities Board (TSSB) filed an objection to Celsius’ recently filed motion. The motion was Celsius’ plan to sell $23 million in stablecoins, as the company petitioned the court on September 15 to gain access to its stash.
“The Debtors have not disclosed in the motion how (the many stable coins) will be sold and how monetization of the stable coins will ultimately benefit the bankruptcy estate and the Debtors’ many consumer creditors.” noted the TSSB’s objection
Following a filing by the TSSB, the Vermont Department of Financial Regulation (VDFR) also objected to the stablecoin claim filed by Celsius 15 days earlier. Vermont securities regulators detailed Thursday that the motion is “unclear” and further “creates (the risk) that the debtor will resume activities that violate state law.”
VDFR’s objection explained to Celsius and its principals that “securities regulators in at least 40 states were engaged in a multi-state investigation.”
“It is entirely unclear what the debtor intends to do with such sale proceeds, whether the requested relief would extend to stable-coin denominated assets such as retail loans to consumers, and the extent to which the use of sale proceeds by the debtor would be supervised by the courts,”said. VDFR filingsdetailing.
Trustee Adds Court-Appointed Investigator to Celsior Bankruptcy Case
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Celsior ran into problems with state securities regulators last year, causing the company to suspend withdrawals and eventually file for bankruptcy protection. at the end of September 2021. New Jersey and Texas securities regulators cracked down on crypto lenders. At the same time, the Alabama Securities Commission filed a cease-and-desist order against Celsius, and Kentucky followed suit.
In addition to Celsius, Brockfi was having problems with regulators in New Jersey, Kentucky, Vermont, Texas, and Alabama at the same time; four days earlier, crypto lender Nexo had been ordered by regulators in California, New York, Washington, Kentucky, Vermont, and South Carolina, and Maryland, were hit with enforcement actions.
During Celsius’ bankruptcy proceedings, recently leaked audio featuring Celsius executives revealed plans to create so-called IOU crypto assets. Two days before the objection from state securities regulators, Celsius CEO Alex Mashinsky resigned. Court trustee William Harrington also appointed Shoba Pillay as a court-appointed inspector on Thursday.
After Mashinsky resigned, the company’s native crypto asset celsius network (CEL) lost value against the U.S. dollar.CEL fell 7.6% this week and 18.9% over the past 14 days, and annual statistics show CEL is 70.7% against the greenback down.FTX and Okx are the top two crypto exchanges trading CELs, and the digital asset has about $7 million in 24-hour global trading volume.
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