Examiner Says Bankrupt Crypto Firm Celsius Failed Control Set Ups To Track Customer Funds

Loading...
Loading...
  • The Independent examiner appointed for Celsius Network LLC's chapter 11 case said that the company failed to set up proper accounting and operational controls.
  • The examiner found that Celsius hadn't developed a separate infrastructure for the custody program, which it started offering in April.
  • Celsius had to transfer funds from the rest of its holdings into the custody accounts to address frequent shortfalls. 
  • Wall Street Journal reported that Celsius continued to mix deposits in so-called withhold accounts, the second type of account it created in response to regulatory pressure, with the rest of its funds.
  • As a result, Celsius customers now face uncertainty over which assets belong to them as of the bankruptcy filing date.
  • In 2021, state and federal regulators began investigating whether Celsius's earn accounts were securities that shouldn't be sold to unaccredited investors. 
  • In September 2021, regulators in New Jersey ordered Celsius to stop offering new yield-earning accounts to individual investors.
  • In response, Celsius created the custody and withhold programs, requiring U.S. customers to make any new deposits into those new types of accounts that earned no interest.
  • At the time of Celsius's bankruptcy filing, $180 million of coins were held in the custody accounts. Withhold accounts have just over $13 million in deposits.
Loading...
Loading...
Market News and Data brought to you by Benzinga APIs
Posted In: CryptocurrencyNewsMarketsGeneralBriefsChapter 11 Bankruptcy
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...