A government-appointed trustee is seeking assistance while grappling with the complexities of embattled crypto lending platform Celsius Network’s (CEL) bankruptcy proceedings.
In a new motion filed a US district bankruptcy court in New York, trustee William Harrington requested the appointment of an examiner to make sense of the lender’s “purposefully opaque” cryptocurrency-based operation.
“An independent examiner is necessary here to investigate and report in a clear and understandable way on the Debtors’ business model, their operations, their investments, their lending transactions, and the nature of the customer accounts to ensure public confidence in the integrity of the bankruptcy system and to neutralize the inherent distrust creditors and parties in interest have in the debtors.”
The United States 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, trustees assist debtors in addressing their business obligations and outstanding debts, as well as managing assets.
Harrington goes on to say that despite Celsius cooperating by providing him with information pertinent to the bankruptcy, significant transparency issues remain.
“The divergent interests of the various estates, the extreme financial irregularities that have taken place, and the extensive mistrust of the Debtors’ customers, all make the appointment of an independent and disinterested examiner in the best interests of creditors, equity security holders, and the bankruptcy estates.”
The submitted document goes on to stress the importance of an independent examiner because “the sums at stake are enormous” as well as there being “credible allegations of incompetence or gross mismanagement.”
Celsius Network initially filed for bankruptcy back in mid-July, just weeks after its native token CEL briefly collapsed from around $0.90 to as low as $0.09 after it halted all customer transactions and withdrawals while citing extreme market volatility.
Since then, the centralized finance (CeFi) firm has been slapped with a class action lawsuit alleging it operated as a Ponzi scheme. California’s Department of Financial Protection and Innovation (DFPI) also issued Celsius a desist and refrain order over claims that the company violated the local Corporation Code.
At time of writing, Celsius Network is down 12.78% on the day and is trading for $2.63.
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