Celsius Network Faces Federal Investigation and Regulatory Probes Amid Bankruptcy

Celsius Network Receives Federal Grand Jury Subpoena

Celsius Network has been issued a federal grand jury subpoena by the U.S. District Court for the Southern District of New York. This subpoena, revealed during bankruptcy proceedings, signals a formal request for testimony and documents as part of an ongoing investigation.

Regulatory Inquiries Intensify

In addition to the federal subpoena, Celsius is facing inquiries from several regulatory bodies, including the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC). These probes highlight the company's growing legal challenges as it seeks to restructure.

Celsius Cooperates with Authorities

Celsius has stated that it is cooperating with all regulatory inquiries. The company views regulators as "key stakeholders" in its reorganization efforts. This cooperation is crucial as Celsius aims to navigate its complex financial and legal situation.

Background on Celsius's Financial Troubles

Celsius halted client withdrawals in June 2022 to prevent a panic-induced sell-off. The following month, the company filed for bankruptcy, becoming one of the most high-profile casualties of the cryptocurrency market downturn. The collapse of the Terra blockchain in May 2022 exacerbated its financial difficulties.

Customer Backlash and Asset Sale Considerations

Celsius has faced significant criticism from customers and creditors over its management and marketing practices. Recent reports suggest the company is exploring the sale of some or all of its assets to repay customers. However, creditors have expressed concerns that the bankruptcy process is overly focused on customer interests.

The ongoing investigations and regulatory scrutiny add another layer of complexity to Celsius's efforts to recover and reorganize. The outcome of these legal proceedings will likely have significant implications for the company's future and its ability to compensate affected stakeholders.