- Two regulators are trying to stop Celsius selling its $23 million stablecoin haul
- Vermont and Texas regulators are worried that the cash injection would allow Celsius to continue with its unregulated offerings
- A hearing on October 6th will decide the matter
Two state regulators are attempting to stop Celsius from selling its stablecoin holdings, saying they worry it will simply allow Celsius to continue its unregulated behaviour. The regulators, from Texas and Vermont, have filed a motion objecting to the bankrupt platform’s plan to increase its cash reserves by selling its holdings, thought to be worth some $23 million, because of a supposed risk the company could use the capital to resume operating in violation of state laws.
Celsius Wants to “Fund the Debtors’ Operations”
Celsius asked the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin haul on September 15th, saying that the move would allow the company to generate liquidity to help “fund the Debtors’ operations.”
Lawyers cited Section 363 of the Bankruptcy Code, which they said is “designed to strike a balance between allowing a business to continue its daily operations without excessive court or creditor oversight and protecting secured creditors and others from dissipation of the estate’s assets.”
Regulators Worry About Celsius’ Intentions
However, the Texas and Vermont regulators have taken issue with the suggestion, claiming yesterday in their twin objections that not only will the injection of capital allow Celsius to resume non-compliant offerings in the state, but that it the company still hasn’t explicitly outlined what it will do with the funds after it sells the stablecoins. This was made clear in the Vermont filing:
It is not at all clear what the debtors intend to do with the proceeds of any such sales, whether the relief requested extends to Stablecoin-denominated assets such as retail loans to consumers, and the degree to which Debtors’ use of sale proceeds will be supervised by the Court.
Celsius still hasn’t registered as a seller of securities with either state, a prospect which now seems massively unlikely, and it will be down to a hearing on October 6th to decide what the company is allowed to do with its massive stablecoin haul.