Connor Jimenez
The appeal wants to postpone the Celsius proceedings until a report on the company’s independent review is submitted over the coming several months.
The decision by Celsius to sell stablecoin holdings and resume withdrawals for some clients has drawn criticism from the Department of Justice (DOJ).
According to the Justice Department, there is a lack of transparency regarding Celsius’ financial status, and crucial choices like these shouldn’t be made until the independent review report is published.
This action by the DOJ supplements appeals that were filed last week by the Vermont Department of Financial Regulation, Texas Department of Banking, and Texas State Securities Board. They all contend that Celsius runs the risk of utilizing the proceeds to carry on breaking state law by selling its stablecoin assets.
The U.S. Department of Justice Trustee William Harrington explained Celsius’ objections to opening withdrawals to “custodial” and “custodial” clients in a filing on September 30 with the Bankruptcy Court for the Southern District of New York. transparency regarding the company’s finances.
Harrington contends in the filing that these withdrawals shouldn’t be made until the independent examination of Celsius’s business operations is finished:
Claims should be rejected until the Reviewer Report is submitted because they are premature. The Withdrawal Movement’s initial goal is to hastily distribute money to a number of creditors before having a full understanding of the Borrowers’ cryptocurrency holdings.
The DOJ opposed a prospective stablecoin sale as well, citing the same worries expressed by Texas and Vermont regulators that Celsius’s action failed to specifically address “what impact such a distribution or sale would have on the firm going forward.”
“Secondly, the Stablecoin Movement seeks to liquidate stablecoins held by Borrowers without informing them of the ownership, separation, or impact of such sales on subsequent distributions to creditors who may have stablecoins deposited with Borrowers,” he says.
Independent Auditor Appointed
Shoba Pillay was named superintendent on September 29 by the United States Board of Trustees, and the New York Bankruptcy court authorized the appointment the same day, claims Harrington.
Pillay will have about two months to draft and submit an audit report on Celsius, which should clearly break down the company’s assets and liabilities.
Harrington argued that “any distribution or sale should be delayed until the parties concerned, the United States Board of Trustees, and the Court make a decision,” thus saying that Celsius’s motions should not be taken into consideration until until after the review report has been submitted. Regarding the debtors’ assets, claims made against them, and the extent to which they “really plan to pay their creditors,” Centigrade is concerned.
Leading Celsius investor Simon Dixon, who founded the cryptocurrency investing site BnkToTheFuture, tweeted on October 1 that the company would try to pay off its debts with Celsius (CEL) tokens. “Previous regulators and regulators will move to reject this,” they said.
In this situation, Dixon believes Voyager Digital has started a bidding battle for the Celsius assets, much like the most recent asset auction, which was won by FTX US for $1.3 billion.