DOJ Calls for Examiner in Crypto Firm Celsius's Bankruptcy Case
August 18 2022 - 7:11PM
Dow Jones News
By Soma Biswas
The Justice Department's bankruptcy watchdog asked a judge
Thursdaty to appoint an independent examiner in crypto firm Celsius
Network LLC's chapter 11 case, saying in a court filing that a
neutral party needs to investigate allegations of gross
mismanagement and incompetence.
U.S. Trustee William Harrington, part of the Justice Department
unit overseeing bankruptcy court, said an examiner needs to look
into the role Celsius's management may have played in the
platform's illiquidity. Celsius froze customers' crypto assets on
its platform about a month before the firm filed for
bankruptcy.
An examiner could also determine if legal claims should be
brought against company management, Mr. Harrington said. Such an
examination is also needed to explain Celsius's business model to
its customers because the cryptocurrency market is so new, opaque
and loosely regulated.
Mr. Harrington added that an examiner should also determine the
value and location of any digital assets the crypto firm holds. The
lack of transparency has resulted in "widespread confusion among
the debtors' customers and parties in interest," government lawyers
said in the filing.
Examiners often are given broad powers in bankruptcy cases to
investigate wrongdoing and balance the interests of competing
parties in chapter 11 processes.
Write to Soma Biswas at soma.biswas@wsj.com
(END) Dow Jones Newswires
August 18, 2022 18:56 ET (22:56 GMT)
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