Neutral third party to investigate Celsius’ finances

A neutral third party will investigate the finances of Celsius Network, which filed for Chapter 11 bankruptcy earlier this year.

The move was approved by a U.S. Bankruptcy Judge in the Southern District of New York following a request by the Justice Department, securities regulators and representatives of creditors.

Crypto lender Celsius has not objected to the investigation by a neutral third party.

However, smaller creditors actively sought to pay off the company’s debts by asking for a receiver instead. The use of receivers in Chapter 11 bankruptcies is rare.

In the past, the Committee for Unsecured Creditors (UCC) – a consumer and creditor group – had raised doubts about the costs associated with an examiner, but recently it has reached an agreement with the Justice Department’s bankruptcy office, the US Trustee Program, to limit its scope. of the examiner’s probe, causing them to change position.

In addition, Martin Glenn – the judge presiding over the Celsius case – has opened up the possibility of further changing the scope of the third-party investigation into the crypto lender’s finances.

The first move to appoint an examiner was last month by the US Trustee. The case requires a neutral investigator because of “extreme financial irregularities” and “the widespread distrust of the debtor’s customers,” according to the US Trustee last month.

Meanwhile, the UCC is also conducting its own investigation into Celsius.

The Block reported that UCC will participate in a call with state regulatory agencies tomorrow to share the status of their respective investigations, according to attorney Gregory Pesce.

In July, Celsius entered Chapter 11 bankruptcy proceedings after it suspended customer withdrawals, exchanges and transfers in June. Users have been unable to withdraw crypto stored in Celsius accounts.

Since then, the company has withstood considerable scrutiny from a number of parties in the proceedings over a perceived lack of clarity and allegations of fraud.

Celius on Thursday sought to return funds to crypto depository holders who have been banned from their accounts, Bloomberg reported.

Celsius Network, a bankrupt crypto-lending firm, filed on Thursday to return funds to crypto custodians locked out of their accounts, Bloomberg reported.

According to a report by Blockchain.News, Celsius asked a US bankruptcy judge for permission to release $50 million worth of cryptocurrency stuck on the platform in so-called escrow accounts, which were designed to store digital coins rather than generate returns.

Celsius has applied for a narrow reopening of withdrawals, saying that not all customers will be eligible.

Celsius plans to refund about $50 million to eligible customers. That’s just a fraction of the more than $200 million in locked escrow accounts on the platform.

More than 300 dissatisfied customers have sent letters to the bankruptcy court to demand their money back. Celsius had a total of 1.7 million customers who collectively owe around $4.7 billion.

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