Judge Martin Glenn of the US Bankruptcy Court in New York gave a green light to the official committee of Celsius creditors to investigate, whether Celsius Network operated as a Ponzi scheme.
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According to a report from The Wall Street Journal, the committee and a court-appointed examiner will have to decide, who will lead the probe into whether Celsius used clients' funds to meet its obligations to others.
The move comes after the creditors committee's lawyer, Greg Pesce, said that " there are flags" that Celsius was a Ponzi scheme. He particularly said:
"We don't know if Celsius was a Ponzi scheme, but there are flags that came up. Let me make it clear we’re looking into whether it is. We don't have an answer to that."
Celsius filed for bankruptcy under Chapter 11 of the US Bankruptcy Code in July this year. The company says the restructuring will help it "maximize value for all stakeholders." Celsius owes users more than $4.7 billion.
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