Ministry of Justice seeks to prevent centenary movement to reopen withdrawals

The Department of Justice (DOJ) is objecting to a proposal by troubled cryptocurrency lender Celsius, which seeks to reopen withdrawals for select clients.

Since Celsius halted withdrawals in June, the company has filed for Chapter 11 bankruptcy, while the CEO recently resigned.

  • William Harrington, a trustee of the US Department of Justice, filed an objection Friday (September 30, 2022) asking the bankruptcy court to deny Celsius’ requests to resume withdrawals from some creditors and sell its stablecoin holdings.
  • As previously reported by CryptoPotato, the company has applied to resume withdrawals for customers whose assets are held in an escrow program and a content account.
  • The US trustee described Celsius’ move as “hasty” and stated that the company is looking to “impulsively distribute funds” without thorough knowledge of its cryptocurrency holdings, and the relationship between the company’s balance sheet and cryptocurrencies deposited by various creditors.
  • Furthermore, the filing alleged that the lender was attempting to liquidate its stablecoin holdings without providing solid information about “ownership, separation, or the impact of these sales on subsequent distributions to creditors who may have stablecoins on collateral with debtors.”
  • An excerpt from the report stated:

“Any distribution or sale at this time may inadvertently affect or limit distributions to other creditors in this situation. The parties involved, the U.S. trustee, and the court will require additional information to assess the impact that such distribution or sale may have.”

  • The US trustee also said that a detailed audit report must be submitted before any distribution or sale can take place. On September 29, Shelby Pillay was appointed as an examiner. Two days ago, Alex Mashinsky resigned as CEO of Celsius.

The post that the Department of Justice is seeking to ban the centenary movement to reopen withdrawals appeared first on CryptoPotato.

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