The Department of Justice objects to Celsius’ plans to reopen withdrawals and sell stablecoins

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Last Updated on October 3, 2022 by Bitfinsider

The DOJ has filed an objection to Celsius’ motion to reopen withdrawals for select customers and sell its stablecoin holdings.

The DOJ claims that the state of Celsius’ finances is opaque and that key decisions like this should be postponed until the independent examiner’s report is completed.

The DOJ’s action supplements the objections filed by the Texas State Securities Board, the Texas Department of Banking, and the Vermont Department of Financial Regulation last week. All three are opposed to Celsius selling its stablecoin holdings, claiming that the capital could be used to resume operating in violation of state laws.

In a filing with the Bankruptcy Court for the Southern District of New York on September 30, a U.S. William Harrington, a DOJ trustee, stated his opposition to Celsius allowing withdrawals to its “custody” and “withhold” customers, citing a lack of transparency in the firm’s financials.

The Department of Justice has also expressed opposition to a potential stablecoin sale, citing similar concerns expressed by Texas and Vermont regulators that Celsius’ motion does not concretely outline “what impact such a distribution or sale would have” on the business moving forward.

“Second,” the filing continues, “the Stablecoin Motion seeks to liquidate stablecoins held by the Debtors without providing information regarding ownership, segregation, or the impact of such sale on later distributions to creditors who may have stablecoins on deposit with the Debtors.”

According to Harrington, the “United States Trustee” appointed Shoba Pillay as the examiner on September 29, with the appointment approved by the New York Bankruptcy court the same day.

Pillay will have about two months to prepare and file an examiner’s report on Celsius, which should provide a detailed breakdown of its assets and liabilities.

Harrington essentially claimed that Celsius’ motions should not even be considered until well after the examiner report was filed, noting that “any distribution or sale should be deferred until interested parties, the United States Trustee, and the Court are able to make a determination” on the value of Celsius liabilities, claims against it, assets, and what “the debtors intends to actually pay its creditors.”

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