A federal judge overseeing the bankruptcy case of crypto lender Celsius has greenlit a motion to appoint an independent examiner to investigate aspects of Celsius’s business.
In an order dated Wednesday from the United States Bankruptcy Court for the Southern District of New York, the order states that The examiner’s investigation will examine Celsius’s digital assets, tax payment procedures and the current state of its mining business following calls for more transparency.
The examiner will also investigate why there was a change in account supply in Aprilresulting in some clients being moved from the Earn Program to Custodial Services, while others were moved to a “Hold Account”.
The US administrator had previously pointed out the lack of transparency around these accounts, as customers are unaware of who has what account and why.. This may be important given that Celsius had asked the court to return assets to “custody clients” but not to its “gain and loan” clients.
The motion to appoint an examiner originally stemmed from an August 18 filing by the US administrator handling Celsius’s bankruptcy proceedings, citing “significant transparency issues” surrounding Celsius’s business operations.
Nevertheless, the CEO of BnkToTheFutureSimon Dixon said the scope of the examiner’s investigation has narrowed since the motion was initially filed so that Celsius does not run out of money.
He also pointed out that Celsius Network CEO Alex Mashinsky would have to provide information about his withdrawals from the platform before the freeze.
CELSIUS HEARING LIVE; @CelsiusUcc legal council going over the examiner motion & reducing the scope so that @CelsiusNetwork doesn’t run out of money. they said @Mashinsky to provide information on his withdrawals from the platform before the freeze.
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 14, 2022
LISTEN TO THE CELSIUS AUDIENCE LIVE; @celsiusucc’s legal council is reviewing the examiner’s motion and narrowing the scope so @celsiusred doesn’t run out of money. They ask @Mashinsky to provide information about their withdrawals from the platform before the freeze.
The last order also outlined that the scope of the investigation could be widened if deemed necessary, but would require consultation with Celsius and the official unsecured creditors committee.
Celsius will be required to submit all documents that the examiner “considers reasonably relevant to conducting the investigationalthough Celsius will have grounds to reject an application, which would then be decided by the courts.”
Once the examiner’s identity has been approved, the examiner will have seven business days to submit a work plan and budget.
The court will then have seven days to approve them, after which the examiner will have 60 days to complete his investigation.
Celsius filed for Chapter 11 bankruptcy and froze withdrawals in July. Since then, some depositors have been told that their funds will be released, but most remain unable to access their assets with no guarantee that they will receive them.
It seems that the examiner will be very busy once he is appointed, as Dixon has also tweeted that the US administrator already has forty parties ready to be interviewed.
CELSIUS HEARING LIVE; @CelsiusUcc legal council opposed to Trustee takeover as they think it may lead to liquidation which is undesirable. Examiner preferred. US Trustee has 40 parties ready to interview for examiners next week.
— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 14, 2022
LISTEN TO THE CELSIUS AUDIENCE LIVE; @CelsiusUcc’s legal council opposes the Administrator takeover as they believe it may lead to liquidation, which is not desirable. Prefer the examiner. The US administrator has 40 parties ready to interview for examiners next week.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.