Celsius wants to sell its mined Bitcoin. Texas regulators don’t trust it.

Texas regulators have asked a US bankruptcy court to reject Celsius’ request to monetize the mined bitcoin, saying they are concerned about how the proceeds will be spent.

In a formal objection filed on Friday, shared by Law360, the Texas State Securities Board (SSB) said Celsius’ past does indeed involve “problematic asset allocation decisions, use of mined bitcoin to repay intercompany loans, potential mismanagement and a continued failure to comply with state regulatory requirements.”

Celsius has failed to outline how it plans to distribute the sale proceeds to its creditors, board members added.

“SSB generally does not object [Celsius’] sale of its mined bitcoin for the benefit of
property; However, Statistics Norway is very concerned about [Celsius’] request a comfort order which
ambiguously allows broad authority to use those assets,” regulators said.

Celsius is among the highest-profile crypto lenders burned by the recent market downturn, fueled by TerraUSD’s (UST) crash and the collapse of crypto hedge fund firm Three Arrows Capital.

The company filed for bankruptcy on July 13, posting a $1.2 billion deficit on its balance sheet. The firm, which owes over $4.8 billion to its users alone, is scrambling to find liquidity to repay creditors.

Its original token, CEL, is now trading for more than double its two-year low recorded after it locked down accounts in early June, but still 65% below its price at the start of the year.

Celsius views its bitcoin mining business as key to its restructuring efforts, it said in a recent filing, believing it could generate revenue for the future and for loan repayments.

The lender projected to generate 10,118 BTC ($243 million) in 2022 and 15,000 BTC ($361 million) in 2023 and claimed to own 80,850 bitcoin rigs with around 43,600 in operation.

“The debtors [Celsius] should not be given carte blanche permission to transfer and dispose of assets in the bankruptcy estate without oversight and, because of the significant risk to the estate’s creditors, should not be allowed to mortgage or invest mined bitcoin in an unstable and highly volatile market,” the board wrote .

Texas is one of at least five states that opened investigations into Celsius shortly after it froze customer funds.

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