U.S. government officials asked that an independent examiner be appointed to look into crypto lender Celsius Network's collapse into bankruptcy, seeking the sort of investigation previously deployed in the high-profile restructurings of Enron and Lehman Brothers.
The U.S. Trustee office, which oversees bankruptcy matters, said there are "numerous questions" about Celsius' operations and its financial health, as well as how its management allowed it to enter bankruptcy, according to a court filing Thursday.
An independent probe, which the judge overseeing the case would have to approve, would answer questions about the company's financials and address "significant transparency issues" in the bankruptcy case, according to the filing.
"There is no real understanding among customers, parties in interest, and the public as to the type or actual value of crypto held by the Debtors or where it is held," the U.S. Trustee said. "An independent examiner is necessary here to investigate and report in a clear and understandable way on the Debtors’ business model, their operations, their investments, their lending transactions, and the nature of the customer accounts to ensure public confidence in the integrity of the bankruptcy system and to neutralize the inherent distrust creditors and parties in interest have in the Debtors."
In the controversial Enron and Lehman cases, an examiner dove into the causes of their spectacular falls. With Enron, the examiner concluded that senior officials at the company were in "a circle of responsibility for Enron's financial demise," according to a 2003 Associated Press article. "Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing," the New York Times reported in 2010.
The U.S. Trustee noted that Celsius took out a third-party loan but did not identify who the lender was, what the collateral was or what kind of loan was issued. Moreover, this was even after the lender revealed it could not return the collateral.
