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Texas and Vermont state authorities have filed a petition opposing the insolvent cryptocurrency lender Celsius' intentions to liquidate its stablecoin assets. On September 29, both authorities issued two papers asserting the possibility of the business using the funds to continue operating against the law. The documents follow a notice sent by Celsius's legal counsel on September 15 demanding approval to sell its stablecoin assets, estimated to be worth $23 million, in the United States Bankruptcy Court for the Southern District of New York. On October 6, there would be a hearing to decide whether to approve or deny the request.
40 States to Investigate Celsius Pre-bankruptcy
The pre-bankruptcy operations of Celsius are presently being examined by more than 40 states, according to a joint filing by the two Texas regulators, including potential unlicensed securities offers. According to Texas authorities, if Celsius sells its assets, the firm may continue non-compliant sales in Texas because it has not yet been listed with the Texas SBB. Moreover, the Vermont regulator expressed similar issues in its objection. Regulators are concerned that the company has not yet clarified what it plans to do with the proceeds after distributing the stablecoins.
Statements of Both Filings
The Vermont regulator's filing states that it is not completely obvious what the debt holders aim to do with the funds raised from such sales. Whether the recovery demands an extension to stablecoin-denominated assets like retail loans to customers and the degree to which the debtors' use of the sale's proceeds would be subject to court supervision. The court stated that Texas is particularly distressed by the Debtors' petition for an order that grants an imprecisely vast obligation to sell and exchange the assets.
Celsius to Complicate Inquiry
State officials want Celsius' petition denied. Texan regulators believe granting Celsius' petition would complicate the inquiry into the debtors' crypto holdings. They stressed, however, that if the petition were to be approved, the debtors' resolution would be limited solely to selling stablecoin and retaining the earnings for the benefit of creditors of the bankruptcy estate.