State regulators in Texas and Vermont have filed a motion opposing beleaguered crypto lender Celsius’s plans to sell its stablecoin holdings.
Separate motions from both regulators, filed on September 29, argue that There is a risk that the company may use the capital to resume operations in violation of state law.
Requests occur after On September 15, the Celsius legal team will apply to the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin holdings, reportedly worth around $23 million. The hearing to accept or reject the motion will take place on October 6.
Nevertheless, The move has not sat well with the Texas State Securities Board (SBB), the Texas Department of Banking and the Vermont Department of Financial Regulation, which filed objections on September 29.
The two Texas regulators, in a joint filing, noted that “More than 40 states” are currently investigating Celsius’s pre-bankruptcy activities in connection with possible unregistered securities offerings.
Texas regulators also highlighted concerns that if Celsius sells its holdings, the company could resume unregistered offerings in the state, given that it is not yet registered with the Texas SBB.. At the same time, the Vermont regulator also highlighted similar concerns in his own objection.
One of the main concerns of regulators is that the company has not explicitly outlined what it will do with the funds after selling the stablecoins.
“It is unclear what the debtors intend to do with the proceeds of such sales, whether the requested relief extends to stablecoin-denominated assets such as retail loans to consumers, and the extent to which the use of debtors of the sale proceeds will be overseen by the Court,” says the Vermont regulator’s filing, while the Texas submission notes that:
“Texas is extremely concerned about the Debtors’ request for an order allowing unambiguously broad authority to sell and/or exchange the assets.”
As such, state regulators are requesting that Celsius’s motion be denied; Texas regulators state that it would “only act to confuse the examination and further muddy the already murky waters that are the Debtors’ cryptocurrency assets.”
However, Texas regulators also said that if the motion in question passes, the “relief granted to the Debtors should be limited to the sale of the stablecoin and hold the proceeds of such sale solely for the benefit of the creditors of the bankruptcy estate.”
Celsius’s bankruptcy case has been very complicated so far, given the murky nature of the company’s balance sheet. Earlier this month, the Bankruptcy Court for the Southern District of New York granted a motion for Celsius to appoint an independent examiner to investigate aspects of his business.
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