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DOJ Seeks to Block Celsius Motion to Reopen Withdrawals

Summary:
The Department of Justice (DOJ) is objecting to a motion by troubled cryptocurrency lender Celsius, seeking to reopen withdrawals for selected customers. Since Celsius halted withdrawals in June, the company has filed for Chapter 11 bankruptcy, while the CEO recently resigned from his position. A United States Trustee for the DOJ, William Harrington, on Friday (September 30, 2022), filed an objection, asking the bankruptcy court to deny Celsius’ motions to reopen withdrawals for certain creditors and sell its stablecoin holdings. As previously reported by CryptoPotato, the firm filed for the resumption of withdrawals for customers whose assets are held in its Custody Program and Withhold Account. The US trustee described Celsius’ motions as “premature,” stating that the

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The Department of Justice (DOJ) is objecting to a motion by troubled cryptocurrency lender Celsius, seeking to reopen withdrawals for selected customers.

Since Celsius halted withdrawals in June, the company has filed for Chapter 11 bankruptcy, while the CEO recently resigned from his position.

  • A United States Trustee for the DOJ, William Harrington, on Friday (September 30, 2022), filed an objection, asking the bankruptcy court to deny Celsius’ motions to reopen withdrawals for certain creditors and sell its stablecoin holdings.
  • As previously reported by CryptoPotato, the firm filed for the resumption of withdrawals for customers whose assets are held in its Custody Program and Withhold Account.
  • The US trustee described Celsius’ motions as “premature,” stating that the company is looking to “impulsively distribute funds” without a comprehensive knowledge of its crypto holding, the relationship between the company’s balance sheet, and crypto deposited by various creditors.
  • Furthermore, the filing argued that the lender is seeking to liquidate its stablecoin holdings without providing robust information concerning “ownership, segregation, or the impact of such sale on later distributions to creditors who may have stablecoins on deposit with the Debtors.”
  • An excerpt from the filing said:

“Any distribution or sale at this juncture could inadvertently impact or limit distributions to other creditors in this case. The interested parties, the United States Trustee, and the Court require additional information to assess what impact such a distribution or sale would have.”

  • The US trustee also said that a detailed examiner’s report should be submitted before any distribution or sale occurs. On September 29, Shelby Pillay was appointed an examiner. Two days before, Alex Mashinsky resigned as Celsius CEO.

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