Celsius’ Asset Sale Faces US Trustee Opposition Over Disclosures

The Justice Department is opposing Celsius Network LLC’s plan to sell its assets, arguing that the bankrupt crypto lender has not fully disclosed details on the assets to be sold.

The sale plan also is premature and incomplete because the company should wait for a court-appointed examiner’s review of its operations, according to the US Trustee’s Thursday filing with the US Bankruptcy Court for the Southern District of New York.

The Vermont Department of Financial Regulation, one of multiple states investigating Celsius, also submitted court filings, similarly opposing the company’s sale plan.

Celsius hasn’t submitted a Chapter 11 reorganization plan, and there’s no apparent justification for holding the asset sale prior to the filing, the US Trustee added.

The bankruptcy court in September ordered an independent examiner to look into how Celsius stores its crypto assets and maintains accounts. The examiner faces a December 10 deadline to issue a report.

Celsius asked the bankruptcy couret last month to approve its bidding procedures. But the motion fails to identify what assets are being sold and is unclear on whether its crypto mining business is included, the US trustee said.

"[T]he status and ownership of Debtors’ most valuable potential asset—the cryptocurrency—has not been determined by the Court and will be addressed at least in part by the Examiner’s report,” the Vermont regulator said Thursday in its filing with the court.

Questions also remain about whether Celsius and its principals are engaging in unregistered securities activity, the regulator said. At least 40 state regulators have been investigating possible mismanagement, fraud, and market manipulation, it said.

The committee of unsecured creditors, which represents the interests of crypto account holders and general unsecured creditors, told the court Thursday that it supports the debtor’s sale plans.

Celsius filed Chapter 11 in July in the aftermath of a $2 trillion crash in crypto markets.

The case is In re Celsius Network LLC, Bankr. S.D.N.Y., No. 22-10964, objection filed 10/13/22.