William K. Harrington, the United States Trustee for Region 2, has opposed a plan by crypto firm Celsius to sell its assets. The relevant documents were filed on October 13, 2022 with the New York Southern Bankruptcy Court.

The Trustee notes that the Celsius’ Motion seeks an order approving bidding procedures to be followed by the sale(s) of substantially all of the Debtors’ assets.

First, bidding procedures should not be approved until and unless it is known what specific assets are to be sold, the Trustee argues. The Motion divides the Debtors’ assets into two groups: (i) Retail Platform Assets and (ii) the Remaining Assets. However, it is not clear if the Retail Platform Assets includes the Debtors’ mining business.

According to various pleadings filed by the Debtors, it is the mining business which gives the Debtors the best chance for financial success in the future. The Trustee asks what is the impact on Celsius’ future if this business is sold. Also unknown are the circumstances under which the Debtors’ loan portfolio is to be sold. If these customer accounts are sold, how are these accounts to be treated by a potential purchaser?

Second, the Trustee says that there appears to be no justification to holding the sale of the Debtors’ assets outside the ordinary course of business, in advance of a plan, and in advance of the filing of a report by the Examiner. That the Debtors have located interested potential bidders is not a basis for conducting auctions of its assets under a “melting ice cube” type of time limitations.

While the United States Trustee is sympathetic to the plight of customers who want financial renumeration as soon as possible, the Examiner has been directed to examine the Debtors’ cryptocurrency holdings – which are – at least in part – the very same assets that comprise the Retail Platform Assets that the Debtors propose to sell. Surely, it makes sense to wait until the Examiner’s Report is filed before any sale is held in order to understand exactly what assets are available for sale or distribution to creditors.

Third, a privacy ombudsman should be appointed, the Trustee says. The Debtors propose to sell customer accounts. As the Court is aware, customers of Celsius have significant concerns regarding transparency and irregularities. Any sale of their accounts should be under the watchful eye of a privacy ombudsman.

Let’s recall that, on July 13, 2022, Celsius Network LLC, Celsius KeyFi LLC, Celsius Lending LLC, Celsius Mining LLC, Celsius Network Inc., Celsius Network Limited, Celsius Networks Lending LLC, and Celsius US Holding LLC each commenced a voluntary case under Chapter 11 of the Bankruptcy Code. On July 19, 2022, the Court entered an Order directing that these cases be jointly administered.