Texas and Vermont state regulators have filed a motion opposing embattled cryptocurrency lender Celsius' plans to sell off its stablecoin holdings.
Separate motions filed on Sept. 29 by both regulators argue that there is a risk that the firm will use the capital to resume operations in violation of state laws.
The filings follow a September 15 notice from Celsius' legal team requesting permission from the United States Bankruptcy Court for the Southern District of New York to sell its stablecoin holdings, which are reportedly worth $23 million. On October 6, a hearing to accept or reject the motion will be held.
However, the Texas State Securities Board (SBB), the Texas Department of Banking, and the Vermont Department of Financial Regulation objected on September 29.
In a joint filing, the two Texas regulators stated that "more than 40 states" are currently looking into Celsius' pre-bankruptcy activities concerning prospective unregistered securities offerings.
Texas regulators expressed concern that if Celsius sells its holdings, it may resume non-compliant services in the state because it is still not registered with the Texas SBB. The Vermont regulator expressed similar concerns in its own objection.
One major source of concern among regulators is that the company has not explicitly stated what it would do with the funds after selling the stablecoins.
As a result, state regulators have asked that Celsius' motion be denied, claiming that it would "only serve to confound the evaluation and further muddy the already muddy waters that are the Debtors' cryptocurrency assets."
However, if the motion is approved, the "relief granted to the Debtors should be restricted to selling stablecoin and carrying the revenue of such sale purely for the benefit of lenders of the bankruptcy estate," according to the Texan regulators.
Because of the cloudy nature of the firm's balance sheet, the Celsius bankruptcy case has been extremely complicated thus far. The United States Bankruptcy Court for the Southern District of New York granted Celsius's motion earlier this month to assign an independent assessor to start investigating parts of its operations.
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