A bankruptcy judge advanced an inquiry into Celsius Network LLC’s business practices and whether it operated as a Ponzi scheme, responding to customer demands to look into how the crypto lender used their money, WSJ Pro Bankruptcy reported. A court-appointed examiner and the official committee of Celsius creditors were instructed in a bankruptcy-court hearing Tuesday to meet and confer about who will lead the probe into whether the firm used some depositors’ money to meet financial obligations to others. “We don’t know if Celsius was a Ponzi scheme, but there are flags that came up,“ said the creditors committee’s lawyer, Greg Pesce. “Let me make it clear we’re looking into whether it is. We don’t have an answer to that.” The examiner, Shoba Pillay, also will broaden the scope of her probe to include the company’s marketing practices and representations it made to attract new customers, as well as its handling of CEL tokens, the firm’s proprietary digital currency. Celsius didn’t immediately respond to a request for comment. The closely held crypto firm, which filed for bankruptcy after freezing withdrawals in June amid a meltdown in digital currencies, has faced allegations from customers and state authorities that it made misleading statements about its financial health and used assets of new investors to pay yields to account holders.
