Examiner Appointment Approved
On September 14, 2022, U.S. Bankruptcy Judge Martin Glenn signed off requesting an independent examiner to be appointed in the Celsius bankruptcy case. This decision follows the motion filed in August to investigate certain aspects of Celsius’ business.
The judge’s order stipulates that the examiner is to thoroughly investigate all digital assets owned by Celsius, the tax payment procedures, and the status of its mining business. This came about after several calls for greater transparency on the company’s part.
The Celsius Decline – How It Began
Celsius, aka Celsius Network LLC, is a currently bankrupt cryptocurrency lending company having its headquarters in Hoboken, New Jersey.
In May 2022, the company had “lent out $8 billion to clients and had almost $12 billion in assets under management.” Fast forward to June 13, 2022, and trouble began when the company placed an indefinite halt on all transfers and withdrawals because of “extreme market conditions.”
This move on Celsius’ part led to very steep declines in prices of bitcoin and other cryptocurrencies, with the total market value of all cryptocurrencies falling to $983 billion, the first time since January 2021 that the market was worth less than $1 trillion collectively. The company filed for Chapter 11 bankruptcy on July 13, 2022, a month after withdrawals were halted. A deficit in the balance sheet to $1.2 billion was reported in a declaration filed the next day.
Enter The Court – Motion, Examiner Probe, and The Future
An application to the United States Bankruptcy Court of the Southern District of New York on August 18 concerning “significant transparency issues” led to Judge Martin Glenn approving the appointment of an independent examiner to scrutinize all business dealings by Celsius wholly.
The examiner will be expected to investigate “why there was a change in account offerings beginning in April 2022 from the Earn Program to the Custody Service for some customers while others were placed in a ‘Withhold Account'”. Celsius’ officers have been mandated to offer their full cooperation with the appointed examiner, adding that the examination to be carried out does not take away from their independent investigations. A work plan and operating budget will be expected within seven days from the examiner once appointed.
The past few months have not been too kind to the network since the halt on withdrawal of deposits, particularly after Terra’s downward spiral in May, causing Celsius to cite unfavorable market conditions as a reason for the move. However, specific experts believe that Celsius can rise from the current depths it has found itself in, pointing at the mining business as a critical factor in its journey back up.
It remains to be seen following the examiner’s appointment, who will be expected to file their results within 60 days of the grant order from the court. However, there will be no public disclosure of the examiner’s findings.
Owing to various calls for transparency on the part of the Celsius Network, Judge Martin Glenn, a U.S. Bankruptcy judge, approved on September 14, 2022, for an independent examiner to probe the bankruptcy case filed by the network.
The examiner’s appointment is now awaited following the approval, and it remains to be seen just how the Celsius network plans to get itself past this phase post-investigation.