US Bankruptcy Court to bring an independent examiner to probe Celsius Network

A United States Bankruptcy Court decided that an independent examiner would look at several facets of Celsius Network’s digital asset holdings. It suggests that the collapsed cryptocurrency lending platform will be subject to stricter scrutiny of its financial attitude.

According to news reports, US Bankruptcy Judge Martin Glenn granted this request on Wednesday. The examiner has not yet been decided, though.

Following the Justice Department’s repeated requests for more transparency during the insolvency proceedings, the court has now ordered the appointment of an independent examiner.

In this instance, the examiner will look at how Celsius stores its cryptocurrency holdings and whether several account types are ever mixed together.

The company and its executives, including CEO Alex Mashinsky, are the target of a thorough examination by a committee of unsecured creditors, which is being led by the law firm White & Case. The report cited White & Case’s Greg Pesce as the source of information.

Following a discussion between US Trustee and Lawyers for Celsius creditors, the independent examiner’s position was limited to prevent duplication in light of this investigation, Pesce continued.

Multiple allegations on Celsius

Regulators in Vermont recently learned that Celsius has been bankrupt since 2019 and requested a more thorough investigation into any possible financial misconduct on the part of the company’s leadership team. Documents showed that the company violated regulations surrounding securities and misled investors about the safety of their funds and promises.

According to the Vermont regulators, Chris Ferraro, Celsius’ CFO, acknowledged in court that the network’s financial problems started with losses incurred in 2020 and 2021. This runs contrary to their assertion that the platform’s liquidity issues were the result of this year’s crypto market crash.

It is important to note that in August, California’s DFPI imposed Desist and Refrain order on Celsius Network, leading to a prohibition from selling and promoting securities in the region, as TheCoinRise reported.