The whole crypto industry has gone through a great downfall in which the top cryptocurrency lending companies have suffered during the previous months. Celsius, one among such victims, not only submitted a bankruptcy filing but several controversies were witnessed afterwards. While Celsius keeps on making endeavors to cope with the strains caused by the customers thereof, a filing – which has been submitted recently – highlighted the new developments.
Celsius Comes Under Great Scrutiny by SEC and CFTC
According to the filing, the crypto lender is experiencing investigations conducted on the behalf of the government agencies of the United States such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and the Commodity Future Trading Commission (CFTC). The respective filing mentions that the extent, as well as the number of these investigations, is significant.
The platform is seemingly liable to investigations or enforcement proceedings in approximately forty states, apart from the inquiries or investigations taking into account the federal government. As a massive number of the clients at Celsius were thought to be unsecured creditors, it appeared that the federal government is keenly looking into the respective case. An interesting thing is that the former filings describe how FTC, CFTC, and SEC had started inquiries on Celsius. Nonetheless, at present, these regulators are jointly focusing on this case.
As the crypto lending firm was extremely famous among the community because of recompensing interest on the token deposits thereof, considerable scrutiny has been passed by it from the SEC. Nonetheless, it halted withdrawals in June this year because the prices of crypto crashed and the risky bets of the institution backfired in advance of pursuing bankruptcy protection in July.
Creditors Accuse Celsius CEO of Deceiving them in Terms of the Risks
Several consumers of Celsius ended up as the unsecured creditors of the company represented on the behalf of the committee. Many letters have been sent by several creditors to the judge presiding over the case, accusing Alex Mashinsky (the CEO of Celsius of resigned recently) of deceiving them regarding the hazards related to entrusting their tokens to the firm.
Yesterday, it was specified that both the SEC as well as the CFTC were engaged in an investigation of Three Arrows Capital (3AC). After several attempts made on the behalf of the Singapore government, it was decided by the US authorities that they should intervene. The crypto market which is in a state of a bear market has had a very hard time in the United States. Because of the diversity of the regulatory entities, it had become very challenging and confusing to regulate the crypto market.
Celsius Bankruptcy Judge to Refer to Guidance from Overseas for the Case
Thus, Martin Glenn (the Chief Bankruptcy Judge in the U.S.) disclosed that in the bankruptcy case of Celsius he would pursue guidance from overseas. The Judge would Potentially refer to the Digital Asset Consultation Paper of the United Kingdom, as revealed by Glenn. He added that perhaps a lot of cases dealing with crypto may cause legal problems for which no governing legal precedents are present in this course or elsewhere across the U.S. or in the rest of the countries where such cases emerge.
