Bloomberg Law
Aug. 10, 2022, 7:38 PMUpdated: Aug. 10, 2022, 8:26 PM

Bankrupt Celsius’ Bitcoin Sales Need More Transparency, DOJ Says (1)

Daniel Gill
Daniel Gill

Bankrupt crypto lender Celsius Network LLC is facing the Justice Department’s opposition to a bid to sell its mined bitcoin and other small assets.

Celsius needs to provide more disclosure before the sales can take place, the US Trustee, the DOJ’s bankruptcy watchdog said in a court filing Tuesday.

"[T]he Debtors have failed to provide the necessary transparency into its business activities or its crypto holdings for any party to determine if these proposed actions are even in the ordinary course let alone for the benefit of the bankruptcy estate,” the US Trustee said in a filing in the US Bankruptcy Court for the Southern District of New York.

The US Trustee also objected to a separate request by Celsius to authorize the company to sell other assets without any further court proceedings.

The second motion “fails to even describe what assets the Debtors want to ‘sell, swap, or transfer,’” the trustee said.

Bankrupt debtors can generally sell assets free and clear of liens and encumbrances. But sales of bankruptcy estate property other than in the ordinary course of business must be approved by the bankruptcy court.

Celsius failed to provide adequate information regarding its business and assets, the trustee said. “To date, there is no information regarding how much cash or cryptocurrency the Debtors held on the Petition Date or since the Petition Date,” it said, referring to the date the bankruptcy was filed.

Celsius’ separate request to sell “de minimis assets” doesn’t describe what those assets are, the trustee said. Determining if a non-debtor holds a lien or some other interest in the subject property is impossible, the trustee said.

In its motion, the debtor asked for permission to sell assets for up to $5 million without getting further permission from the court.

When it filed bankruptcy in July, Celsius owned “80,850 mining ‘rigs,’ 43,632 of which were operational, generating approximately 14.2 bitcoin per day,” the company said in its motion to approve bitcoin sales. Celsius said it stopped “monetizing” its mining operations after it filed bankruptcy. Now it seeks authority to do so through sales.

But it’s unclear why the non-operational rigs are offline and whether Celsius intends to use its bitcoin to purchase new rigs or to repay a $750 million inter-company loan or for any other purpose, the trustee said.

The trustee also questioned why Celsius says it’s “financially constrained” when it previously disclosed at the time of bankruptcy filing that it had $170 million in cash.

A hearing on the sale motions is scheduled for Aug. 16.

The case is In re Celsius Network LLC, Bankr. S.D.N.Y., No. 22-10964, objection filed 8/9/22.

(Updated with additional reporting throughout.)

To contact the reporter on this story: Daniel Gill in Washington at

To contact the editors responsible for this story: Roger Yu at; Maria Chutchian at

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