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The US says that the bankruptcy of cryptocurrency lender Celsius should be looked at

U.S. government officials requested the same kind of probe that was used in the well-known restructurings of Enron and Lehman Brothers in order to look into the bankruptcy of cryptocurrency lender Celsius Network.

According to a court filing on Thursday, the U.S. Trustee office, which is in charge of handling bankruptcy cases, stated that there are "numerous questions" regarding Celsius' activities, its financial situation, and how its management permitted it to file for bankruptcy.


According to the application, queries regarding the company's finances would be answered by an independent investigation, which the judge supervising the case would have to accept. It would also address "significant transparency issues" in the bankruptcy case.


Customers, interested parties, and the general public do not really know what kind of cryptocurrency the Debtors actually own or how much of it they actually hold, according to the U.S. Trustee. "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."

An investigator delved into the reasons for the dramatic drop in the contentious Enron and Lehman instances. According to a 2003 Associated Press story, the examiner in the case of Enron came to the conclusion that senior corporate leaders had "a circle of responsibility for Enron's financial demise," According to a bankruptcy examiner's assessment from 2010, "Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing," according to the New York Times.


Celsius obtained a loan from a third party, but the U.S. Trustee failed to mention the identity of the lender, the nature of the collateral, or the specifics of the loan. Even after the lender admitted it could not repay the collateral, this continued.


According to the filing, which used the last name of Celsius CEO Alex Mashinsky, "No description of the types of claims the Debtors may have against this lender are made in the Mashinsky Declaration, nor is there an explanation for why legal recourse was not sought. There is also no description of any investigation by the Debtors into its legal recourse." 


Customers of Celsius have also expressed their lack of trust in the business in documents submitted to the court, according to the Trustee's office.


The statement stated that selecting an impartial examiner "would be in the best interest" of Celsius, its creditors, and equity holders.


"The Debtors’ professionals acknowledge many of these facts and circumstances and have provided information requested by the United States Trustee. Irrespective of such cooperation, however, 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 document stated.


The request is objectionable, according to a Twitter account for Celsius' unsecured creditors, who claim that hiring an examiner will "run up millions in costs when CEL should cut costs."

By fLEXI tEAM

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