According to a report by Wall Street Journal, a bankruptcy judge in New York widened the investigation against Celsius Network at creditors’ request to determine if Celsius worked like a Ponzi scheme.
Several state authorities, notably the Vermont Department of Financial Regulation, which said in September that the beginning of major problems may be dated to at least 2020, supported the proposal.
Independent examiner Shoba Pillay and the official committee of Celsius creditors should decide who will lead the investigation into whether the Celsius Network exploited newer investments to settle outstanding obligations and if the business was running like a Ponzi scheme.
Also Read: Celsius to give Around $5M to Court-appointed Independent Examiner
Pillay will also expand the scope of her investigation to look into Celsius’ marketing techniques and how the firm handles CEL tokens.
According to reports, the move to expand the examiner’s function has alarmed some creditors who fear the change will be time-consuming and expensive.
The creditor committee’s attorney, Greg Pesce, noted that they thoroughly analysed the situation even though they “don’t know if Celsius was a Ponzi scheme, but there are flags that came up.”
“Let me make it clear we’re looking into whether it is. We don’t have an answer to that,” Pesce stated.
The judge did warn, though, that if Pillay “isn’t allowed to broaden her probe,” Celsius Network may face expensive and extended inquiries.
All of this began when Celsius halted withdrawals for several days in July, citing the prolonged “crypto winter” and a general market decline. Then the company formally filed for Bankruptcy, socking the industry.
Also Read: Celsius Founder Alex Mashinsky withdrew $10mn ahead of Bankruptcy
