Celsius CEL coin symbol in a cellphone

US court appoints examiner in Celsius’ bankruptcy case amid brewing storms

A U.S. court has approved the appointment of an external examiner to probe into the affairs of Celsius as the bankruptcy case heats up. The court order signed by bankruptcy judge Martin Glenn names Shoba Pillay as the appointed examiner in the matter.

Pillay is a partner at Jenner & Block, a Chicago-based law firm where she heads Data Privacy and Cybersecurity Practice. Her LinkedIn profile reveals that she is a partner in the firm’s National Security, Sanctions, and Export Controls Practice. She previously had a stint as an Assistant U.S. Attorney in Illinois.

The order charges Pillay to provide the court with a detailed report of the financial dealings of the company and the condition of its mining business within a stipulated time frame. While the decision to appoint an examiner is a rarity in a bankruptcy case, parties thought it wise to select a neutral investigator on the grounds of “extreme financial irregularities.”

The payment of the examiner for the services rendered was amplified by concerned parties, but the recent appointment suggests that a consensus was reached. The Committee for Unsecured Creditors (UCC), the representative of creditors, agreed to the appointment of a creditor following the narrowing of the scope of the examiner, while some pined for the appointment of a trustee.

In July, digital assets lending firm Celsius filed for Chapter 11 bankruptcy after it previously froze withdrawals of customers’ digital assets. According to the court documents, Celsius claimed it had 100,000 creditors, with Pharos USD Fund SP being the largest. Other creditors include Alameda Research, The Caen Group, and ICB Solutions, among others.

A trail of allegations of dishonesty

Since the start of the Celsius saga, there have been bitter allegations of fraud and dishonest behavior. Jason Stone, a business partner of the company, filed a lawsuit alleging that the company “artificially inflated the price of its own digital coin” and misled investors over its ability to hedge risk.

“Thus, while Celsius continued to market itself as a transparent and well-capitalized business, in reality, it had become a Ponzi scheme,” claimed the lawsuit.

Celsius filed a countersuit against Stone’s claims on the grounds that he stole the firm’s property and used the Tornado Cash mixer to cover his tracks. Celsius further alleges that “the defendants’ liability to Celsius is staggering,” and the action arises from the “defendants’ incompetence, deceit, and conversion.”

Thousands of creditors are holding to the belief that the appointment of an examiner will unravel details leading to the firm’s unexpected implosion.

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