In court documents, it is revealed that bankrupt crypto lending platform Celsius is the subject of a federal investigation as well as inquiries from 40 states.
Facing Several Investigations
Celsius is being investigated by a number of government entities and may face charges and fines for allegedly mismanaging customer funds, according to a recent filing.
The filing said, “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.”
“The Committee opposed requests by certain state regulators that the Examination address such matters to avoid the costs and delay from such a wide-ranging inquiry…” cited to the filing.
Avoiding Redundancy and Wasted Resources
According to the committee representing Celsius creditors, launching an investigation by the court would result in redundancy and wasted resources.
“A wide-ranging Examiner’s investigation could needlessly duplicate the investigation being conducted by the Committee, which would likely waste estate resources and reduce recoveries. Additionally, such an examination could delay the restructuring process, and result in significant professional fees and expenses…”
Also, they said it would be duplicative, costly, and inappropriate to expand the scope of the Examiner to investigate particular issues already investigated by the state agencies or securities regulators.
“The Committee continues to believe that the Examiner should not spend much, if any, time monitoring ongoing governmental investigations, the proceeds of which will presumably result in charges, fines, or other penalties that will benefit governmental entities, and not the debtors’ creditors,” they added.
On July 13, Celsius filed for bankruptcy after suspending all withdrawals earlier this year.
“The Examiner has notified the Committee that she may seek to expand the scope of her Examination under the Examination Order. Accordingly, the Committee cannot fully consider whether the Work Plan (including any fees and expenses contemplated thereunder) is appropriate because the Examination’s scope remains undefined,” according to the filing.