- Celsius did not explain how it plans to pass the sale proceeds to its creditors, the board members added.
- The company filed for bankruptcy on July 13 and posted a $1.2 billion shortfall on its balance sheet
Texas regulators have asked a US bankruptcy court to reject Celsius’s request to monetize its mined bitcoin, saying they are concerned about how the proceeds would be used.
In a formal objection filed Friday, shared by Law360, the Texas State Securities Board (SSB) said Celsius’ past admittedly involved “problematic asset deployment decisions, the use of mined bitcoin to repay intercompany loans, potential mismanagement and continued non-compliance”. with state regulatory requirements.
Celsius did not explain how it plans to pass the sale proceeds to its creditors, the board members added.
“The SSB is not opposed, in general, to [Celsius’] sale of its mined bitcoin for the benefit of the
domain; however, the SSB is extremely concerned about [Celsius’] request for a comfort order which
allows for ambiguous and broad authority to use these assets,” the regulators said.
Celsius is among the most high-profile crypto lenders burned by the recent market downturn, sparked by the crash of TerraUSD (UST) and the collapse of crypto hedge fund firm Three Arrows Capital.
The company filed for bankruptcy on July 13 and posted a $1.2 billion deficit on its balance sheet. The company, which owes more than $4.8 billion to its users alone, is trying to find cash to repay its creditors.
Its native token, CEL, is now trading for more than double its two-year lows recorded after locking accounts in early June, but still 65% below its price at the start of the year.
Celsius sees its bitcoin mining business as essential to its restructuring efforts, it said in a recent filing, believing it could generate revenue for the future and for loan repayments.
The lender planned to generate 10,118 BTC ($243 million) in 2022 and 15,000 BTC ($361 million) in 2023 and claimed to own 80,850 bitcoin platforms with around 43,600 in operation.
“The debtors [Celsius] should not be given carte blanche to transfer and dispose of bankruptcy estate assets without supervision, and due to the substantial risk to the estate’s creditors, should not be allowed to mortgage or further invest mined bitcoin in any market unstable and highly fluctuating,” the board wrote.
Texas is one of at least five states that opened investigations into Celsius shortly after freezing customer funds.
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