US Regulatory Agency Files Motion Demanding Probe of Bankrupt Crypto Lender Celsius Network

A government-appointed trustee is seeking assistance as he grapples with the intricacies of the bankruptcy proceedings of the Celsius Network (CEL) cryptocurrency lending platform.

In a new motion filed with the United States District Bankruptcy Court in New York, trustee William Harrington called for the appointment of an examiner to make sense of the “intentionally opaque” transaction based on the lender’s cryptocurrency.

“Here an independent examiner is needed to investigate and report in a clear and understandable way about the business model of the debtors, their operations, their investments, their lending operations and the nature of client accounts to ensure public confidence in the ‘integrity of the bankruptcy and neutralize the intrinsic distrust that creditors and interested parties have towards debtors ”.

The US trustee program is overseen by the Department of Justice (DOJ). Trustees are appointed by the government to serve on behalf of debtors during bankruptcy proceedings.

In the case of Chapter 11 bankruptcies, the trustees assist debtors in meeting their business obligations and outstanding debts, as well as in managing assets.

Harrington goes on to say that while Celsius cooperated by providing information relevant to the bankruptcy, significant transparency problems remain.

“The diverging interests of the various assets, the serious financial irregularities that have occurred and the widespread distrust of the Debtors’ clients, mean that the appointment of an independent and disinterested examiner in the best interest of creditors, equity holders and the bankruptcy estate “.

The document presented continues underlining the importance of an independent examiner because “the sums involved are huge” as well as “credible accusations of incompetence or serious mismanagement”.

Celsius Network initially filed for bankruptcy in mid-July, just weeks after its native CEL token briefly plummeted from around $ 0.90 to a low of $ 0.09 after stopping all customer transactions and withdrawals citing extreme market volatility.

Since then, the centralized finance company (CeFi) has been slapped with a class action lawsuit claiming it operated as a Ponzi scheme. The California Department of Financial Protection and Innovation (DFPI) also issued Celsius with an injunction to desist and refrain on claims that the company violated local corporate code.

At the time of writing, Celsius Network is down 12.78% and is trading at $ 2.63.

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