Shareholders Call For Investigation Into Celsius’ “Ponzi Scheme” Operations At Bankruptcy Hearing
- Preferred shareholders of Celsius called for an investigation into claims of the crypto lender operating like a Ponzi scheme.
- The Judge has reprimanded Celsius’ attorneys for attempting to seal a motion regarding the $3 million employee bonus.
- Unsecured creditors are demanding investigations into the crypto lender’s business operations, including the relationship with FTX.
- State securities regulators want to investigate the misrepresentations made by the crypto lender to its customers.
At Celsius’ bankruptcy hearing held earlier today, the presiding Judge Martin Glenn heard arguments pertaining to various issues, including the crypto lender’s claim of ownership of stablecoins, the Key Employment Retention Plan, and concerns raised by the Unsecured Creditors Committee, among other things.
Preferred shareholders of the company have called for an investigation into Celsius’ business activities to determine whether it operated like a Ponzi scheme. The U.S Trustee is seeking a similar investigation. Judge Glenn has taken cognizance of the concerns surrounding the crypto lender’s questionable operations and has directed the court examiner and the Celsius Unsecured Creditors Committee to settle on who will investigate this angle.
David Frishberg, one of the unsecured creditors, has raised questions regarding the company’s relationship with crypto exchange FTX and has demanded a probe into the matter.
State securities regulators, who have launched enforcement actions against the bankrupt lender, wish to increase the scope of investigations and look into the misrepresentations made by the company to its lenders. However, the Unsecured Creditors Committee has objected to this request, citing concerns over the involved cost and time. Interestingly, the regulators have indicated that they may launch a probe into the conduct of Kirkland & Ellis, the attorneys appearing for Celsius.
Celsius reprimanded for trying to conceal details of $3M employee bonuses
Judge Glenn clarified early in the hearing that he had no intention of approving a sealing motion filed by Celsius attorneys Kirkland & Ellis. The motion in question pertains to the Key Employment Retention Plan (KERP) proposed by the bankrupt crypto lender Celsius last month. As per the plan, almost $3 million in bonuses were to be handed out to the company’s employees in a bid to retain them.
William Harrington, the court-appointed U.S Trustee for this case, had filed a motion in response, criticizing what he called an “illogical” plan by the cash-strapped crypto lender. Describing it as “unacceptable” the judge has dismissed Kirkland & Ellis’ attempt to seal their motion. The judge has further directed the U.S Trustee to look into the employees’ salaries and reach an agreement with the company.
The next hearing is scheduled for 15 November 2022.
Source: Read Full Article