Texas regulators are not happy with the wording.
Only two weeks ago the ailing company Celsius filed for approval to sell stablecoins currently in its possession. The prelim investigation saw no preliminary problems nor any reason to deny the request – this was even after it was discovered the sale would be use to fund the return to operations and not the customers that lost out. There was indeed a need for further deliberation and that was set for Oct.6
Not out of the water
Though things initially looked good for Celsius to move forward with its idea it would seem Texas regulators have put a wrench in the works of the company. The regulators have informed the court of their misgivings . On the 29th the regulators expressed their issues with the sale early.
The Texas State Security Board, The Texas Department of Banking , and the Attorney General representing the state all filed an objection to the proposal stating they were concerned with there it was headed and the language used in the proposal submitted by Celsius.
Wording is important
According the the authorities Celsius has not provided a competent enough or precise enough explanation of how many stablecoins the company actually has at the moment. Also, “the Debtors seek to sell and/or exchange any stablecoin , whether currently held or received in the future, on a post-petition basis consistent with prepetition practices”
This simply can be translated as the request allowing the sale of stablecoins using the same business practices used up until now, which would be problematic seeing as how those business practices led to the situation the company is in now.
One more objection would be that even though a stablecoin is pegged to the dollar they are still crypto and should be considered as part of the debtor’s estate.
“Texas objects to any language in the proposed order that would allow use of the funds in question to pay intercompany transfers from Debtors to non-Debtor affiliates or related obligations, and asserts that any proceeds from the Debtors’ sale of stablecoin should be held for the benefit of creditors.”
Texas SSB states that Celsius isn’t even registered with them for a license allowing it to exchange money or sell securities, thus barring the lender from selling stablecoins from any Texas-based entity.
The state of Texas has now requested that the motion of Celsius be denied until it can be changed to ensure the proceeds of the sale would be used to pay off the creditors instead of just business as usual.