US Trustee Arguing That Celsius Should Not Be Allowed To Withdraw Customer Funds

A United States Trustee reporting to the Department of Justice has urged in court that Celsius should not be permitted to commence customer withdrawals awaiting further inquiry.

Celsius’ intentions to reopen withdrawals may be pushed back owing to complaints from a member of the US Trustee Program, which monitors bankruptcy administration.

Celsius asked for clearance on September 1 to discharge $225 million from its custody program and withhold accounts. Now, a member of the Department of Justice’s U.S. Trustee Program is opposing the request.

US Trustee William K. Harrington opposed Celsius’ plans to “reopen withdrawals for certain customers with respect to certain assets” held in custody and withhold accounts in a court filing on September 30.

Celsius’ intentions to disburse those monies, according to Harrington, are premature. He went on to say that the firm’s proposal would impulsively disperse monies without a thorough grasp of its crypto holdings and inter-account crypto transfers. It would also disregard the connection between the company’s balance sheet and the cryptocurrency placed by creditors.

Celsius should not be authorized to distribute cash until an Examiner Report is issued, according to Harrington. That report will explain if the corporation commingled money and why its account offers changed in April 2022.

Harrington contended that determining how many creditors must be paid, which crypto assets are due, and how much is owed is unfeasible. He went on to say that releasing the monies might inadvertently influence or limit payouts to other creditors.

In related developments, regulators in Texas and Vermont protested on Thursday Celsius’ intentions to sell $23 million in stablecoin assets. This sale was also opposed by Harrington’s filing.

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