US Trustee investigate Celsius

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The U.S. Trustee requests that Celsius be investigated for its “serious transparency issues.”

US Trustee investigate Celsius
US Trustee investigate Celsius / Image Credit: CRYPKYP
1660904797 19 Aug / 10:26

The Trustee in charge of Celsius' bankruptcy case has asked an examiner to help clarify several intricate matters. A third-party examiner should be appointed to "untangle" the troubled network's financial affairs and business activities, according to the United States Trustee managing Celsius' bankruptcy proceedings.

The U.S. Trustee has requested an examiner to look into claims of "incompetence or gross mismanagement" and "significant transparency issues" surrounding Celsius' operations in the context of the bankruptcy case in a motion filed on August 18 to the United States Bankruptcy Court by William K. Harrington.

The bankruptcy courts appoint examiners to look into the specifics of challenging cases that are presented to them. They have been established in other prominent bankruptcy cases like Lehman Brothers during the subprime mortgage crisis and can provide information to the courts from an unbiased point of view.

Given the case’s complexity, the request argues that the appointment of an examiner would be advantageous to the parties since they may offer information outside the scope of the court’s knowledge.

“An investigation by an independent examiner—who would understandably present his or her findings—is essential to provide the Court, the United States Trustee, creditors, and other interested parties with transparency and clarity as to the business structure, procedures, and liquidity of the Debtors,” according to the court’s rules.

Harrington also stated that there are “credible charges of ineptitude or gross mismanagement,” and an examiner would be able to decide whether legal action should be taken against management.

Additionally, the U.S. Trustee has asserted that Celsius’ business activities have “serious transparency difficulties.”

According to Harrington, “the Debtors have not produced appropriate information regarding their liquidity position, business plan, the flow of traditional cash funds, or the value of their crypto assets.

Harrington also said that an examiner might be able to sort through the wealth of online data obscuring the truth about Celsius and causing its clients to draw their judgments.

The Celsius Official Committee of Unsecured Creditors points out the costs of doing so and is one of the parties involved who does not support the request for an examiner.

However, experts not directly involved in the case, including David Adler, a bankruptcy partner at McCarter & English, appear to concur that an examiner is necessary.

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