Celsius bankruptcy judge gives the nod for independent examiner probe

A federal judge overseeing crypto lender Celsius’ bankruptcy case has given the green light for the motion to appoint an independent examiner to investigate aspects of Celsius’ business.

In an order dated Sept. 14 from the United States Bankruptcy Court of the Southern District of New York, the order notes that the examiner’s investigation will look into Celsius’ digital assets, tax payment procedures, the current status of its mining business, following calls for greater transparency. 

The examiner will also look into why there was a change in account offerings in April, resulting in some customers being moved from the Earn Program to Custody Services while others were moved to a “Withhold Account.”

The U.S. Trustee had previously referred to a lack of transparency around these accounts, with customers unaware of who holds what account and why. This may be important given Celsius had asked the court to return assets to “custody clients,” but not its “earn-and-borrow” clients.

A motion to appoint an examiner originally came from an Aug. 18 filing from the United States Trustee handling Celsius’ bankruptcy proceedings, citing “significant transparency issues” surrounding Celsius’ business operations.

However, BnkToTheFuture CEO Simon Dixon said the scope of the examiner’s investigation was pared down since the motion was initially filed so that Celsius doesn’t run out of money.

He also noted that Celsius Network CEO Alex Mahinsky would need to provide information on his withdrawals from the platform before the freeze.

CELSIUS HEARING LIVE; @CelsiusUcc legal council going over the examiner motion & reducing the scope so that @CelsiusNetwork doesn’t run out of money. They said @Mashinsky to provide information on his withdrawals from the platform before the freeze.

— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) September 14, 2022

The latest order also outlined that the scope of the investigation could be expanded if deemed necessary, but would require consultation with Celsius and the official committee of unsecured creditors.

Celsius will be required to produce all documents the examiner “reasonably deems relevant to perform the Investigation, though Celsius will have grounds to reject a request, which would then be decided by the courts. 

Related: Celsius CEO plans to restructure firm to focus on crypto custody: Report

Once the identity of the examiner has been approved, they will have seven business days to produce a work…