- The SEC is requesting more information about Celsius’ assets and operations before its bankruptcy, delaying its plans to relaunch.
- Celsius aims to reorganize through bankruptcy and restart its crypto lending business with new regulated entities.
- Crypto lending platforms like Celsius face heightened regulatory scrutiny after collapses amid market turmoil, as authorities examine their customer deposit practices.
The U.S. Securities and Exchange Commission wants more information about the assets of the former crypto lender, which is reorganizing through bankruptcy, a person familiar with the matter said.
SEC Requests More Information
The U.S. Securities and Exchange Commission wants more information about the assets of Celsius Network LLC, the former crypto lender which filed for bankruptcy in July 2022.
Specifically, the SEC is requesting details on how Celsius managed and accounted for customer deposits as it seeks to understand whether the firm was operating properly in the months leading up to its collapse.
The regulator’s request has created a speed bump in Celsius’ plans to relaunch its business. The company had hoped to quickly reorganize and restart operations but satisfying the SEC’s queries is likely to take time.
Celsius Seeking to Relaunch
Celsius is aiming to relaunch its business after filing for bankruptcy protection amid a liquidity crunch and customer withdrawals.
The company plans to set up a new entity that would provide services to U.S. customers in a regulated fashion, while using its original international entity to serve overseas users.
Celsius is seeking to reorganize and emerge from bankruptcy, but the SEC’s information requests threaten to delay that process. Providing details on its assets and operations prior to bankruptcy could take months.
Crypto Industry Facing Regulatory Scrutiny
The crypto lending industry is facing heightened scrutiny from regulators after Celsius and other major players collapsed amid broad selling in digital asset markets.
Authorities are examining whether firms like Celsius were appropriately managing and accounting for customer deposits and operating in a sustainable fashion.
The SEC is seeking to understand if Celsius misled users about the safety of their deposits and the risks involved. Satisfying the regulator’s information requests could determine how quickly Celsius is able to relaunch.
Conclusion
The SEC is requesting more details on Celsius‘ assets and operations before it filed for bankruptcy, creating delays and uncertainty around the crypto lender’s plans to reorganize and restart its business. Celsius is seeking to quickly emerge from bankruptcy but satisfying the regulator’s queries could take significant time. The crypto lending industry faces intense scrutiny on how it handled customer funds leading up to its recent turmoil.
