Bankrupt crypto lender Celsius facing US federal ‘investigations’
BANKRUPT cryptocurrency lender Celsius Network faces US federal “investigations”, according to a filing from lawyers for its committee of unsecured creditors.
“The number and extent of investigations of the debtors by governmental entities is significant: Celsius is apparently subject to enforcement proceedings or investigations in at least 40 states, in addition to investigations or inquiries involving the federal government,” counsel said in the Tuesday (Oct 18) filing.
The document cited a Sep 7 statement from the Texas State Securities Board that said multiple states are looking into Celsius.
The latest filing signals ever greater scrutiny of Celsius, which rocketed in popularity by paying people interest on their coin deposits. But it froze withdrawals in June as crypto prices collapsed and its risky bets backfired before seeking bankruptcy protection in July.
Prior filings show that the US Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Trade Commission have sent inquiries to the lender. The company has also received a federal grand jury subpoena from the US District Court for the Southern District of New York.
Most of Celsius’s customers ended up as the firm’s unsecured creditors, represented by the committee.
Many creditors have sent letters to the judge in charge of the case, accusing Celsius and its former chief executive officer Alex Mashinsky of misleading them about risks involved in entrusting their coins to the company.
The judge recently appointed an examiner to look into this and other issues. The committee doesn’t want the examiner’s time to be taken up by keeping an eye on ongoing government investigations, given their extent. BLOOMBERG
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