• Celsius wishes to sell its Bitcoin mined. Texas regulators are skeptical

  • Texas officials have requested a bankruptcy court in the United States to refuse Celsius’ request to monetize its mined bitcoin, citing concerns about how the funds might be utilized.

    The Texas State Securities Board (SSB) said in a formal objection filed on Friday and shared with Law360 that Celsius’ past includes “problematic asset deployment decisions, using mined bitcoin to repay intercompany loans, potential mismanagement, and a continued failure to comply with state regulatory requirements.”

    Celsius has failed to explain how the sale revenues will benefit its creditors, according to board members.

    “In principle, the SSB does not object to [Celsius’] sale of mined bitcoin for the benefit of the estate; nevertheless, the SSB is greatly disturbed about [Celsius’] request for a comfort order that grants ambiguously broad authorization to use these assets.”

    Celsius is one of the most visible crypto lenders to have been harmed by the recent market decline, which was fueled by the collapse of TerraUSD (UST) and crypto hedge fund firm Three Arrows Capital.

    On July 13, the corporation declared bankruptcy, citing a $1.2 billion deficiency on its balance sheet. The company is attempting to find liquidity to repay creditors after owing over $4.8 billion to its users alone.

    Its native token, CEL, is presently trading at more than double its two-year lows after it locked accounts in early June, but it is still 65 percent lower than it was at the start of the year.

    Celsius sees its bitcoin mining company as critical to its restructuring efforts, according to a recent filing, and believes it can produce cash for the future and loan repayments.

    The lender predicted 10,118 BTC ($243 million) in 2022 and 15,000 BTC ($361 million) in 2023, and claimed to own 80,850 bitcoin rigs, 43,600 of which were operational.

    “The debtors [Celsius] should not be granted permission carte blanche to transfer and dispose of assets of the bankruptcy estate without oversight, and because of the substantial risk to creditors of the estate, should not be allowed to further hypothecate or invest mined bitcoin in an unstable and highly fluctuating market,” the board wrote.

    Texas is one of at least five states that launched investigations into Celsius soon after the company froze consumer payments.

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