As Celsius’ bankruptcy proceedings continue, the court’s trustee William Harrington appointed an examiner on Thursday in order to review the company’s finances, according to a filing submitted on September 29. On the same day, state securities officials from Vermont and Texas filed objections to the crypto lender accessing the company’s stablecoin cache. A 15-day period prior to the objections was when the paperwork filed by the crypto lender stated that Celsius sought $23 Million in stablecoin reserve funds.
State Securities Officials Join the Celsius Bankruptcy War
In recent months, state securities regulators were very active in cryptocurrency cases. The Texas State Securities Board (TSSB), filed an objection to a recent motion filed by Celsius on September 29. The motion was Celsius’ plan to sell $23 million in stablecoins as the company petitioned the court on September 15 to gain access to the stash.
“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 notes. The Texas securities regulator further noted that while the examiner was being appointed the request was “inappropriate.”
TSSB submitted a file. The Vermont Department of Financial Regulation also filed objections to stablecoin motion Celsius, which was filed fifteen days earlier. Vermont’s securities regulator detailed on Thursday that the motion was “unclear” and further “creates [a] risk that the debtors will resume activities which violate state law.”
The VDFR objection explains that “at least 40 state securities regulators were engaged in a multistate investigation” into Celsius and its principals.
“It is not at all clear what the debtors intend to do with the proceeds of any such sales, whether the relief requested extends to stablecoin-denominated assets such as retail loans to consumers, and the degree to which debtors’ use of sale proceeds will be supervised by the court,” the VDFR filing details.
Court Appoints a Trustee to be an Examiner for the Celsius Bankruptcy Matter
Celsius was having problems last year with state securities regulators. The firm then stopped withdrawals and finally filed for bankruptcy protection. New Jersey Securities Commission and Texas took action against the crypto lender at the beginning of September 2021. The Alabama Securities Commission also filed cease and desist orders against Celsius. Kentucky was next.
Blockfi also had problems with Texas regulators, New Jersey and Kentucky at the same time as Celsius. The enforcement action against Nexo, a crypto lender, was brought by New York, Washington and Kentucky.
Recently leaked audio of Celsius executives revealed plans to establish a crypto-asset called the IOU. Celsius CEO Alex Mashinsky was forced to resign two days before state securities regulators raised objections. The court’s trustee William Harrington also appointed Shoba Pillay as the court-appointed examiner on Thursday.
After Mashinsky resigned, the company’s native crypto asset celsius network (CEL) dropped in value against the U.S. dollar. CEL dropped 7.6% in this week, and 18.9% over the last fourteen days. However, year-to date statistics indicate that CEL has lost 70.7% against dollars. CEL is down 7.6% on Okx and FTX, while Okx and FTX are trading CEL the most. The digital asset trades CEL at around $7,000,000 per hour.
What do you think about the state regulators objecting to Celsius’ plan to sell stablecoin assets? Please comment below to let us know your thoughts on this topic.
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