A committee of unsecured creditors of Celsius Network has filed a motion with the court, as they want to stop the crypto lending platform from selling off its stablecoin holdings.
The group of creditors submitted the written protest against the sale after a number of objections had been filed on September 29th by a number of securities regulators.
Securities regulators object
The now defunct-crypto lender Celsius had filed a motion on September 15th with the bankruptcy court in which it had demanded permission for selling its stablecoins worth $23 million.
The aim of the court filing was to gain access to their stablecoin stash after a recording of an all-hands meeting was leaked, which indicated that the bankrupt firm was trying to introduce a revival plan.
Two weeks after the company had submitted the request for accessing its stablecoin cache on September 15th, state securities officials from Texas and Vermont had filed objections against the move.
According to the Texas State Securities Board (TSSB), the request put forward by Celsius Network for its stablecoins was ‘inappropriate’.
The objection of the TSSB said that the motion from the debtors had not disclosed just how many stablecoins they intended to sell and how the bankruptcy estate would benefit from its monetization, along with its creditors.
The official committee of the company’s unsecured creditors also filed an objection on October 25th, 2022 and said in their motion that the stablecoin request should not be approved.
According to the committee, the ownership of these stablecoins is contested because there are some creditors who believe that they belong to the lender’s customers.
But, in accordance with the official ‘Terms of Service’ of the crypto lender, it is not clarified how the digital assets will be treated and the rights that will be given to customers in the event that the company files for bankruptcy.
In addition, the Terms of Service clarify that all titles and rights are granted by Celsius customers to the company for any assets.
Even though the bold lettering and fine print in the Terms of Service provide enough details, the committee of unsecured creditors still wants the company to prove ownership of the stablecoins.
The creditors have demanded evidence and arguments that can explicitly show that the assets are owned by the lender because they believe that it does not have any evidence of this scenario.
The bankruptcy case of Celsius Network has not gone on smoothly, to say the least. The company has had to deal with opposition at every step of the way.
However, the court did grant approval to Celsius’ request on August 17th about obtaining the bitcoin holdings that were obtained via the mining activities of the company.
The court has been sent a number of letters by the creditors in which they pled with the judge to release the funds to customers because they are in dire need of their money.
One woman said in a letter that stablecoin holdings should be treated in a different manner.