Bankrupt crypto lender Celsius will soon get an independent review

Celsius Network's books will soon be wrangled and ironed out by someone with zero skin in the game — an order by Judge Martin Glenn, who is presiding over the crypto lender's bankruptcy case.

Why it matters: Friday's hearing was supposed to be about setting the schedule for various motions from account holders seeking the immediate return of their assets, which have been locked on the platform since June. But what has already been made very clear — this won't be so simple.

Driving the news: At Celsius' bankruptcy hearing on Friday, Glenn asked recently appointed independent examiner Shoba Pillay, partner at Chicago-based law firm Jenner & Block, to deliver an interim report that will help the process of settling the crypto lender's debts.

• Pillay on Monday filed to speed up the time to approve a rule that would allow her to compel "document production and oral examination."

What they're saying: "Every dollar out is a dollar less available to the general bulk of unsecured creditors," Glenn said during the Friday hearing, emphasizing the need for a non-stakeholder's review of the issues at hand.

Details: At issue is the treatment of customer funds in "Withhold" and "Custody" accounts, and whether they do, in fact, differ materially from other accounts.

• Custody and Withhold accounts are effectively used as storage, the latter, used to park assets of customers who are located in a place where Celsius can't service them; customers of those accounts banded together and retained their own legal representation.
• Celsius, which itself doesn't view those assets as part of the bankruptcy estate, isn't objecting to the court order. (The firm is also asking to sell stablecoins to fund its Chapter 11 case.)

Be smart: A win for Withhold and Custody account holders would be for Glenn to order the return of their funds, with no preference action — meaning a claim can't be made on those funds later.

Zoom in: There were a few other diversions Friday.

• There was the issue of Celsius executives withdrawing funds from the platform before the crypto lender filed for bankruptcy in July. The idea was raised of clawbacks for assets in question, while another person wanted to discuss a recently filed objection.
• Glenn pointed his opening question during Celsius' Friday hearing at the news, asking whether newly named CEO Chris Ferraro withdrew any assets from the platform in the 90 days before the bankruptcy filing; legal representation for Celsius said he had not.

Catch up quick: Published financial documents showed Celsius' top brass collectively withdrew some $18 million in digital assets before filing for bankruptcy in July.

• Alex Mashinsky and Daniel Leon resigned as CEO and CFO, respectively, in the last two weeks.
• Chief Technology Officer Nuke Goldstein last week was also discovered to have made withdrawals.
• Goldstein's legal representation tells Axios that his situation differed materially from most published reports when considering that he also made deposits on the platform in the same weeks leading up to the filing.

The intrigue: An individual unsecured creditor asked the judge why the Court hadn't already clawed back assets that were withdrawn by Mashinsky.

• Glenn responded that the independent examiner's report would likely address that issue.

The big picture: The scope of Pillay's analysis has been predetermined, but her report will shed light on how accounts were created and how assets within them were moved — details that could determine who has claim to them.

Yes, but: Some of the issues Pillay's report will touch on will also be concurrently analyzed by other interested parties, who can ultimately disagree with the independent examiner's findings.

What's next: Pillay's interim report is due in November.