Department of Justice to dismiss Celsius Network’s plans to resume withdrawals

The embattled crypto lender Celsius Network has filed a move to resume withdrawals for a subset of its customers, but the United States Department of Justice (DOJ) has displayed objection.

William Harrington, a US Trustee for the DOJ, submitted an objection on Friday, September 30, 2022, requesting that Celsius Network’s applications to sell its stablecoin holdings and resume withdrawals for some creditors be denied by the bankruptcy court.

The company requested that withdrawals for clients whose assets are stored in its Custody Program and Withhold Account be allowed to resume.

The US trustee called Celsius Network’s motions “premature” and claimed that the firm was attempting to “impulsively distribute funds” without having a complete knowledge of its crypto holdings or the connections between its balance sheet and the bitcoin that various creditors have claimed.

Celsius faces opposition from DOJ

In addition, it was reported that Celsius was attempting to sell off its stablecoin assets without adequately disclosing any information on “ownership, segregation, or the impact of such sale on later distributions to creditors who may have stablecoins on deposit with the Debtors.”

Any sale or distribution at this point might unintentionally affect or restrict payouts to other creditors in this matter, according to an excerpt from the filing. To determine the effects of such a distribution or sale, the interested parties, the United States Trustee, and the Court require more information.

The US trustee further stated that before any distribution or sale takes place, a thorough examiner’s report must be submitted. Shelby Pillay was appointed an examiner on September 29.

Notably, the company has filed for Chapter 11 bankruptcy since Celsius stopped accepting withdrawals in June, and the CEO recently announced his resignation. Recently, as TheCoinRise reported, Alex Mashinsky, Celsius Network’s CEO has submitted his resignation letter to the Special Committee of the Board of Directors on September 28.