The motion by Celsius to sell its stablecoin holdings and reopen withdrawals for a limited number of customers has been objected to by the Department of Justice (DOJ).
According to the DOJ, there is a lack of transparency in Celsius’ financial situation, and important decisions like this shouldn’t be made until the independent examiner report has been submitted.
The DOJ’s action supplements the objections that the Vermont Department of Financial Regulation, Texas Department of Banking, and Texas State Securities Board filed last week.
All three claim that selling Celsius’ stablecoin holdings would put the company at risk of using the proceeds to resume operating against the law.
William Harrington stated an objection to Celsius opening up withdrawals to its “custody” and “withhold” customers in a filing on September 30 with the Bankruptcy Court for the Southern District of New York, a U.S. Trustee for the DOJ, citing a lack of transparency regarding the company’s financials.
In his filing, Harrington argues that such withdrawals shouldn’t be made available until the independent examiner’s report on Celsius’s business operations is finished.
“The Motions are premature and should be denied until after the Examiner Report is filed. First, the Withdrawal Motion seeks to impulsively distribute funds to one group of creditors in advance of a fulsome understanding of the Debtors’ cryptocurrency holdings.”
The DOJ has also voiced opposition to a potential stablecoin sell-off, citing the same worries expressed by Texas and Vermont regulators that Celsius’ motion fails to specifically define “what impact such a distribution or sale would have” on the company’s future operations.
“Second, the Stablecoin Motion seeks to liquidate stablecoins held by the Debtors without providing information regarding ownership, segregation, or the impact of such sale on later distributions to creditors who may have stablecoins on deposit with the Debtors,”the filing reads.
According to Harrington, the appointment of Shoba Pillay as the examiner was approved by the New York Bankruptcy court on September 29 by the “United States Trustee.”
Pillay should have about two months to draft and submit an examiner’s report on Celsius that outlines the company’s assets and liabilities.
In essence, Harrington argued that Celsius’ motions should not even be taken into consideration until after the examiner report has been submitted, stating that “any distribution or sale should be deferred until interested parties, the United States Trustee, and the Court are able to make a determination” on the value of Celsius’ liabilities, claims against it, its assets, and what “the debtors intends to actually pay its creditors.”