Washington State Hops on Celsius Network’s Bankruptcy Case

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Cel­sius has been grilled by state watch­dogs for alleged “finan­cial mismanagements.”

In a recent turn of events, Washington’s Assis­tant Attor­ney Gen­er­al Stephen Man­ning filed a motion on Sep­tem­ber 22nd to Judge Mar­tin Glenn to rep­re­sent the Wash­ing­ton State Depart­ment of Finan­cial Institutions.

The fil­ing read,

“I cer­ti­fy that I am a mem­ber in good stand­ing of the bar in the State of Wash­ing­ton and, if applic­a­ble, the bar of the U.S. Dis­trict Court for the West­ern Dis­trict of Wash­ing­ton and U.S. Court of Appeals for the Ninth Circuit.”

  • The cryp­to lender first froze cus­tomer with­drawals in June, blam­ing “extreme mar­ket conditions.”
  • It laid off around 150 employ­ees short­ly there­after and onboard­ed restruc­tur­ing con­sul­tants from an advi­so­ry firm, Alvarez & Marsal, to “pre­serve and pro­tect assets.”
  • The fol­low­ing month, it filed for Chap­ter 11 bank­rupt­cy pro­tec­tion, and the sub­se­quent pro­ceed­ings in the South­ern Dis­trict of New York revealed the depths of its finan­cial trou­bles. Cel­sius report­ed­ly owes 500,000 cred­i­tors approx­i­mate­ly $5 billion.
  • Since then, state secu­ri­ties reg­u­la­tors from Texas, Ver­mont, Wis­con­sin, and now Wash­ing­ton have pushed for greater transparency.
  • Vermont’s Depart­ment of Finan­cial Reg­u­la­tion (DFR), for one, lev­eled seri­ous alle­ga­tions against the trou­bled cryp­to lender. After claim­ing that Cel­sius has been insol­vent since 2019, the DFR lat­er alleged that, in real­i­ty, the plat­form was nev­er prof­itable enough to pay out the promised yields.
  • Cel­sius was also accused of mar­ket manip­u­la­tion and boost­ing the price of its native CEL token.
  • The Unit­ed States Depart­ment of Jus­tice also called for a court-appoint­ed exam­in­er to ensure that Cel­sius is pro­vid­ing cred­i­tors with accu­rate information.
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