Celsius Creditors Prevent Company From Selling Mined Bitcoin

After Celsius’s creditors declared CEO Alex Mashinsky’s assurances to customers to be empty promises, they also blocked an attempt to sell some of the company’s mined cryptocurrency during the day. The hearing took place on August 11.

Celsius Creditor Prevents Sale of Mining Bitcoin

During a hearing in the Chapter 11 bankruptcy proceeding today, the committee moved to block Celsius’s attempts to sell some of its mined cryptocurrency. 

Celsius Mining is the Bitcoin mining subsidiary of Celsius Network, the embattled crypto lender that filed for bankruptcy on July 13. A day later, the mining operation joined its parent company in the bankruptcy filing. In May, Celsius Mining filed a draft registration with the U.S. Securities and Exchange Commission to go public.

This week, attorneys representing the committee wrote in a court filing that they first need more insight into how selling this company’s mined Bitcoin will be carried out and how the proceeds from the sale will be used.

The company has previously said that it will use its mining operation to pay back creditors and clients. In fact, at the start of the proceedings in July, Celsius got approval from the judge to spend $5 million to jumpstart its mining operation. But that’s since drawn criticism from the U.S. Department of Justice and now the creditor committee.

The committee also said it is launching a “broad-ranging investigation” and expects to invoke Bankruptcy Rule 2004.

That rule would permit the kind of extensive discovery that may compel parties to testify or provide documents in a manner akin to a deposition in a civil dispute, if the judge gave it the go-ahead.

On August 8, the committee of unsecured creditors filed a statement calling out “empty and false promises” he made days before the company froze customer assets.

“Celsius’ assurances turned out to be empty and false promises. On June 12, 2022—less than a week after promising to ‘damn the torpedoes’—Celsius initiated a ‘Pause’ and halted all account holder withdrawals due to ‘extreme market conditions,’”

The attorneys wrote in the statement

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