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Celsius Judge Approves Independent Probe of Bankrupt Crypto Lender’s Holdings

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(Bloomberg) -- An independent examiner will probe the digital asset holdings of Celsius Network LLC, a further sign of the intense scrutiny the crypto lender is facing in bankruptcy.

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US Bankruptcy Judge Martin Glenn in a hearing Wednesday signed off on a request to appoint an examiner in the case. The move originated with an arm of the Justice Department that oversees bankruptcy court, which has repeatedly called for heightened transparency during the insolvency proceedings.

The examiner will, among other things, look into how Celsius stores its crypto and whether various account types are commingled, court papers show. The examiner has not yet been selected.

The scope of the examination was pared down following discussions between the US Trustee and lawyers for Celsius creditors. Lawyers for the crypto lender’s official committee of unsecured creditors worried that a broad examination would duplicate work already being done by the committee, wasting time and money, Greg Pesce of White & Case said on behalf of the group in the hearing.

The creditor committee is already undertaking a wide-ranging investigation of the company and its officers, including whether Celsius or Chief Executive Officer Alex Mashinsky engaged in any misconduct in the run-up to the bankruptcy. The group has begun engaging with Mashinsky and is receiving information about his withdrawals from the platform, Pesce said.

On Thursday, the committee will join a call with the Texas attorney general and other state regulatory agencies on the status of its investigation, Pesce said.

The bankruptcy case is Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York (Manhattan).

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