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The US Federal Trade Commission (FTC) is set to join the ongoing bankruptcy case against the Celsius crypto lending firm. The FTC has requested a copy of the relevant documents related to the case.
FTC to join Celsius bankruptcy case
On September 13, FTC attorneys Kathryn Johnson and Kathryn Aizpuru asked the judge presiding over the case to represent the FTC in the case. The lawyers have requested a copy of the relevant documents related to the case, but this request has not yet been accepted.
The FTC has yet to disclose the motive behind Celsius joining the bankruptcy case, the request was first reported by CoinDesk. However, this is not the first time that the regulator has made a request to join bankruptcy proceedings.
In the year In 2014, the agency was embroiled in a bankruptcy case for an education technology company. At the time, the FTC argued that sensitive customer details could be exposed in the company’s process. The FTC, which is primarily concerned with consumer protection, could further complicate Celsius’ bankruptcy case.
The issue of Celsius loss attracts regulatory attention
Celsius stopped issuing funds in June 2022 and later filed for bankruptcy in July. Since filing the bankruptcy case, several regulatory bodies in the US have taken an interest in the bankruptcy case as they aim to monitor the process and outcome of the process.
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State regulators in Texas, Vermont and Wisconsin want more transparency in Celsius’ bankruptcy process. State regulators argued that Celsius had been dishonest with its customers and misled them for months before filing for bankruptcy.
The Vermont filing shows that Celsius CEO Alex Mashinsky assured customers on May 11 that their money was safe, and the company lost about $454 million between May 2 and May 12.
The Texas filing is similar, with Celsius saying it will comply with all withdrawal requests five days after the blog post. Celsius’ operations are currently being investigated by 40 state securities regulators on various issues such as securities fraud, market manipulation, unregistered securities and mismanagement.
The regulators will support the U.S. Department of Justice’s request for an independent investigator to ensure that Celsius provides accurate information to creditors.
According to the DOJ, having a court-appointed investigator would allow for an independent review of Celsius’ operations and finances. The DOJ also said the challenge would provide clarity on the confusion and uncertainty surrounding the creditor’s bankruptcy.
Last week, Celsius filed suit in bankruptcy court saying it would comply with a request to have an independent investigator. However, the independent review will have a limited scope beyond what the DOJ originally requested.
According to the company, it welcomed the independent investigation by the court, but argued that the original proposal by the DOJ would prolong the bankruptcy case for months. The proposal from the bankruptcy creditor supports an independent review of the company’s cryptocurrency holdings, compliance with tax obligations, transfer of assets to different accounts, and energy costs of its Bitcoin mining operations.
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