- The independent auditor appointed for Celsius Network LLCs The Chapter 11 case said the company had failed to establish proper accounting and operational controls.
- The examiner found that Celsius had not developed separate infrastructure for the child custody program it has been offering since April.
- Celsius had to transfer funds from the remainder of its holdings to custody accounts to address frequent shortages.
- Wall Street Journal reported that Celsius continued to shuffle deposits in so-called withhold accounts, the second type of accounts it created in response to regulatory pressure, with the rest of its funds.
- As a result, Celsius customers now face uncertainty as to what assets they own at the time of filing for bankruptcy.
- In 2021, state and federal regulators began investigating whether Celsius’ earned accounts were securities not to be sold to non-accredited investors.
- In September 2021, regulators in New Jersey directed Celsius to stop offering new yield accounts for individual investors.
- In response, Celsius created the custody and withhold programs, which require US customers to make all new deposits into these new types of accounts that do not earn interest.
- At the time Celsius filed for bankruptcy, $180 million worth of coins were in custody. Withheld accounts have just over $13 million in deposits.
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