A committee of unsecured creditors stemming from the Celsius bankruptcy case has filed a motion with the court to stop the now-defunct crypto lender from selling the company’s stablecoin holdings. Following objections by a number of securities regulators, the creditors group has filed a written protest against the sale.
Celsius selling $23 million in Stablecoins is a problem for creditors
Celsius, an embattled cryptocurrency lending company filed a motion in bankruptcy court seeking permission to purchase $23 million worth of stablecoins. Following a recording of an all-hands meeting that showed Celsius wanting to revive the company, the court filed a motion to access the stablecoin stock. Two weeks later, the court requested the stablecoins from Celsius. Then state security officials in Texas and Vermont filed motions to stop Celsius from acquiring the stablecoins.
The Texas State Securities Board (TSSB) said that Celsius’ request for the stablecoin cache was “inappropriate.” “The debtors fail to disclose in the motion how [many stablecoins] will be sold, and how the monetization of the stablecoin ultimately benefits the bankruptcy estate and the many consumer creditors of the debtors,” the TSSB objection explains.
On Oct. 25, 2022, the official committee of unsecured Celsius creditors stressed in its motion that the stablecoin sale request “should not be approved at this time.” The committee believes there’s contested ownership as specific creditors believe the coins are owned by Celsius’ customers. However, the official Celsius terms of service (ToS) explains that it is “unknown how your digital assets would be treated and what rights you would have to such digital assets in the event that you, Celsius or any third-party custodian became subject to an insolvency case.”
The ToS also explains the following:
[Customers grant Celsius]Any rights or title in such assets may be transferred to the owner at his sole discretion.
‘Not Your Keys, Not Your Coins’
The Celsius ToS is very detailed and has bold fonts. However, the official committee unsecured Celsius creditors feels that Celsius should prove that the stablecoins are actually part of the estate. The creditors want to see arguments and evidence that explicitly show the assets belong to Celsius because the creditors wholeheartedly believe the “debtors provided no evidence to support their request.”
The Celsius bankruptcy case has not been smooth and there’s been opposition to the company’s decisions nearly every step of the way. On Aug. 17, however, the court did approve the request Celsius made to obtain the company’s bitcoin holdings acquired from the firm’s mining operation.
The court has received letters from creditors requesting that the money held by Celsius be released to them. Stablecoins: A woman who suffered a loss of 50,000 USDC stated in writing that she feels her stablecoin assets must be considered differently when bankruptcy proceedings are underway.
What do you think about the unsecured Celsius creditors’ official committee’s motion objecting to Celsius selling the $23 million in stablecoins? Please comment below to let us know your thoughts on this topic.
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