DOJ Official Objects to Withdrawal Request by Celsius Network

• U.S. Trustee William K. Harrington filed paperwork with the court.
• Harrington criticized Celsius’s timing for releasing the money.

Resuming withdrawals is a top priority for Celsius, but the company may have to wait since the U.S. Trustee Program (which regulates the management of bankruptcy proceedings) has concerns. Celsius sought approval to release $225 million from its custody program and withhold accounts. A U.S. Trustee Program official from the Department of Justice is now pushing back against that demand.

Objecting to Celsius’s intent to “reopen withdrawals for certain customers with respect to certain assets” held in custody and withhold accounts, U.S. Trustee William K. Harrington filed paperwork with the court.

Not Until Examiner Report Submitted

Harrington criticized Celsius’s timing for releasing the money. Furthermore, he continued, saying the company was asking to “impulsively distribute” assets without first fully comprehending its cryptocurrency holdings or how to move cryptocurrencies across accounts. Additionally, it would disregard the connection between the company’s financial sheet and creditors’ deposits of cryptocurrency.

Harrington further said that until an Examiner Report is submitted, Celsius shouldn’t be authorized to disburse money. Whether or if the corporation blends customer cash and the reasoning for an alteration to account options in April of 2022 will be included in that document.

Moreover, Harrington said it is hard to know how many creditors need to be paid, which crypto assets are due, and how much money is owed to them. Next, he cautioned that “inadvertently impact or limit distributions to other creditors” if the monies were released.

The court has not yet decided whether or not to overturn the U.S. Trustee’s objection, so clients’ withdrawals may be further delayed. Moreover, on October 6, there will be a hearing to explore the issue. Recently a stablecoin sale proposal of $23M by Celsius was objected to by Texas and Vermont regulators.

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