State securities regulators in Texas and Vermont are objecting to crypto lender Celsius's plan to sell its stablecoin holdings.
The Texas State Securities Board, the Texas Department of Banking and the Vermont Department of Financial Regulation filed their objection today. Celsius wants to sell the stablecoin holdings in order to shore up its finances amid the ongoing bankruptcy proceedings.
Vermont's lawyers said it's possible Celsius could use the proceeds to resume potentially illegal activities. They objected on the basis that the Celsius request doesn't detail how the firm would use the funds, and thus "creates the risk [Celsius] will resume operating in violation of state law." The filing references the collaborative investigation among 40 state regulators into Celsius' activities that include potential unregistered activity, fraud and market manipulation.
The Texas agencies filed jointly with similar arguments, calling Celsius' request to sell its stablecoin "troublingly broad." Celsius failed to provide sufficient details in their application to sell the stablecoin holdings, according to the Texas filing.
"The Debtors fail to disclose in the Motion how much stablecoin will be sold, and how the monetization of the stablecoin ultimately benefits the bankruptcy estate and the many consumer creditors of the Debtors," said the Texas filing.
Celsius asked the court for permission to sell off stablecoin holdings midway through this month after disclosing the proceeds to be around $23 million. At the time, it said it owns "eleven different forms" of stablecoins but did not name the tokens. A hearing on the matter is scheduled for Oct. 6.
The regulators' objections are a common chorus in the Chapter 11 case, which began in July of this year. Throughout the process, parties including state securities regulators and the U.S. Trustee have continuously cited a lack of clarity from the bankrupt firm.
The court appointed an outside examiner on Thursday to produce a third-party report on the firm's financials.
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