Home » Regulators reject Celsius motion to reopen withdrawals

Regulators reject Celsius motion to reopen withdrawals

4th Oct 22 1:11 pm

The US Department of Justice (DOJ) has objected to defunct lender Celsius’ motion to allow some of its users to withdraw funds as well as sell its stablecoin holdings.

According to the DOJ, Celsius’ financials are lacking transparency, and important decisions like these should be avoided pending the filing of an independent examiner report, CoinTelegraph reported.

Several regulators join the protest

The DOJ’s protest compounds the objections filed last week by the Texas Department of Banking, Texas State Securities Board, and the Department of Financial Regulation of the state of Vermont. All three regulators are against Celsius selling its stablecoins.

They claim the firm could use the proceeds to relaunch operations in violation of state legislation. DOJ Trustee William Harrington objected to Celsius allowing its “custody” and “withhold” users to withdraw funds due to a lack of financial transparency in a recent filing with the Bankruptcy Court for the Southern District of New York.

The filing stated, “The Motions are premature and should be denied until after the Examiner Report is filed.

“First, the Withdrawal Motion seeks to impulsively distribute funds to one group of creditors in advance of a fulsome understanding of the Debtors’ cryptocurrency holdings.”

Potential stablecoin selloff is off the table

Highlighting concerns expressed by Vermont and Texas regulators, the DOJ expressed opposition to a potential stablecoin selloff. It appears the firm’s motion doesn’t provide specific information about such a sale or distribution’s impact on the business moving forward.

Independent examiner Shoba Pillay was appointed by the DOJ Trustee to review the filing on Sept. 29. The New York Bankruptcy court endorsed the appointment on the same date.

The examiner will have around 60 days to draft and file their report on Celsius, hopefully offering a clear breakdown of its assets and liabilities.

Lead Celsius investor predicts bidding war

Crypto investment firm BnkToTheFuture was the biggest investor in Celsius. Its founder Simon Dixon accurately predicted on October 1 on Twitter that Celsius would try to repay its creditors in its native Celsius token within the framework of a reorganization plan.

He added that the plan would not be endorsed by regulators and they would file objections to it. His next prediction is for a “bidding war” for the defunct lender’s assets, not unlike the recent auction for Voyager Digital’s assets, which amount to $1.3 billion. FTX US won the auction.

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