• The US Trustee’s Office Requests an Independent Examiner on Celsius

  • Celsius’ bankruptcy trustee has requested the appointment of an independent examiner to ‘untangle’ the company’s financial affairs and commercial operations.

    Celsius Is Put on Trial

    The US Trustee, William K. Harrington, asked for an examiner to look into allegations of “incompetence or gross mismanagement” as well as “significant transparency issues” surrounding Celsius’ operations in the context of the bankruptcy case in a motion filed about a week ago to the United States Bankruptcy Court.

    Examiners are assigned by bankruptcy courts to investigate the complexities of complex cases submitted before them. They can provide material to the courts from a neutral position and have been appointed in prior high-profile bankruptcy cases, such as Lehman Brothers, during the subprime mortgage crisis.

    According to the complexities of the case, the appointment of an examiner would benefit the parties involved because they may provide information beyond the court’s expertise:

    “An investigation by an independent examiner—who would present his or her findings in an understandable way—is essential to provide the Court, the United States Trustee, creditors, and other parties in interest with transparency and clarity as to the business structure, practices, and liquidity of the debtors.”

    Furthermore, Harrington indicated that an examiner would be able to determine whether or not legal action should be taken against management if there are “credible complaints of ineptitude or gross mismanagement.”

    Celsius’ business operations, according to the US Trustee, have “serious transparency issues.”

    “The debtors have not supplied appropriate information regarding their liquidity position, business model, traditional cash fund flow, or the value of their crypto assets,” Harrington said, adding that the information will be used to help evaluate any proposed restructuring or sale.

    Harrington also said that an examiner might be able to sort through the deluge of information on the internet that is muddying the facts regarding Celsius, allowing its customers to draw their own opinions.

    The Celsius Official Committee of Unsecured Creditors cites cost as a reason for not agreeing on the need for an examiner.

    Experts who are not directly involved in the case, such as David Adler, Bankruptcy Partner at McCarter & English David Adler, appear to agree on the need for an examiner.

    Is the Tokenization Plan for Community First Working?

    While the losses prompted sadness, property loss, and even death among Celsius’s clients, many of them have banded together to ensure their assets are recovered.

    Broad Pro Trust Company founder and CEO Paul Ditter presented an explanation of his concept via a Twitter thread. The goal was to tokenize the cryptocurrency company’s assets and commercial operations, such as its Bitcoin mining business and cybersecurity subsidiary, GK8.

    Celsius, on the other hand, responded to Community First’s suggested tokenization and restructure plan ideas in a recent tweet.

    Furthermore, the investors voiced their trust in the tokenization plan’s success, recognizing the great opportunity to modernize Celsius and deliver maximum value to all account holders. This follows a tweet from one of the investors imploring Celsius to do the right thing and file or allow the release of funds that is now being held in custody.

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