By
Chimamanda U. Martha
February 8th, 2024
The court has asked Celsius to throw more light on the proposed KERP program while also ordering a probe into its past business dealings.
The Celsius bankruptcy case appears to be taking another dimension as Martin Glenn – the Federal judge presiding over it, has ordered a probe into the past dealings of the lender. The court order came during a November 1 hearing, following customers’ claims that Celsius operated a Ponzi scheme. According to the customers, Celsius robbed Peter to pay Paul. They claimed it did so, by using the assets of new users to pay for the yields earned by existing users.
As a result, the Judge has issued a directive for the examiner and the official committee of Celsius creditors to come up with who will head the investigation. This was revealed in a Tuesday report by Law360.
Recall that an examiner was appointed by the judge in early September. That was after several calls were made about an alleged lack of transparency on the part of Celsius regarding its business. The role of the examiner is to oversee Celsius’ business operations including its tax payment culture and the transfer of its customers to and from different accounts.
Meanwhile, it is also worth mentioning that the Ponzi scheme allegations are not strange to Celsius. That is because the troubled crypto lender has been severally accused of it. Most notably, during its lawsuit with the decentralized finance (DeFi) protocol KeyFi on July 7.
Celsius Asked to Explain KERP Motion
Recall that on October 11, Celsius put forward a motion to pay $3 million to about 62 employees. The effort is in line with its key employee retention plan (KERP) program. However, per the November 1 hearing, the court has now asked Celsius to throw more light on the proposed KERP program. The court says it needs a better understanding of some parts of the motion, and only then will it give its approval.
The parts that are being questioned are none other than those that state who will be eligible for the KERP bonus scheme. But even more than that, it appears sketchy that the salary details and positions of the proposed participants are no longer accessible to the public.
Celsius filed for chapter 11 bankruptcy in July. At the time, the lender cited reasons bordering on the prevalent crypto market condition and general plunging of asset values. It also added that mismanagement and poor decisions related to asset deployment were responsible for its predicament.
Ever since filing, however, its case has continued to proceed through the court.