Washington State Hops on Celsius Network’s Bankruptcy Case

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.