The Celsius Network Required To Provide Evidence To US Federal Prosecutors

The Celsius Network

The Celsius network was ordered to appear in court to provide evidence due to the company freezing users’ accounts in June. The United States’ Federal prosecutors said that the Celsius network trapped most of its users’ savings on the platform. The subpoena was issued on a bankrupt crypto platform in the month of June by the US Department of Justice in Manhattan.

The bankrupt crypto platform, Celsius, tweeted that the company has filed petitions for the chapter 11 bankruptcy process in response to the announcement and the company decided to initiate a financial restructuring on the platform. When Celsius filed for Chapter 11 bankruptcy, it released a balance sheet that showed a $1.2 billion (USD) loss.

In June 2022, by following the terms and conditions of the crypto market, Celsius froze the users’ withdrawals that affected the digital assets in large amounts, surpassing nearly $300 billion (USD) in that selloff in crypto assets and leaving retail investors behind with their savings.

Celsius’s platform has nearly 100,000 customers and assets worth approximately $5.5 billion (USD). Celsius stated that assets which are locked in these filings are not supported by any stakeholder or “it may not go as far as some custody programs and withheld account holders. Similar kinds of security schemes can be seen in Britain and in the European Union (EU).

“We are cooperating with all regulatory inquiries, and regulators are key stakeholders in our reorganization. We are not commenting as to the specific details of any inquiries.”

The court didn’t announce a bar date yet to file a claim. Once the proceedings are approved by the court, then an official notification will be released for the users to file a claim. The motion is scheduled to be heard on November 1st for customers who want to submit proof of claim.

Recently, the co-founder of Celsius network, Alex Mashinsky, withdrew $10 million (USD) from savings to pay the taxes before the seizing of users’ accounts. As per the report on October 11, because of Celsius freezing assets, the investors in the Cardano network had lost nearly $25 million (USD).

Another cryptocurrency lender in the United States, Voyager Digital Ltd., has announced bankruptcy after freezing its users’ deposits. In May 2022, after the fall of popular crypto tokens like Luna and Terra USD, the investors came under scrutiny after their prices fell in demand.