Celsius is conducting its own misconduct investigation as customers tell a bankruptcy court that the company's founders misled them

• Celsius has enlisted its special committee to investigate complaints of "misconduct."
• The bankruptcy court has gotten some 300 letters from customers, many clamoring about lost savings.

A special committee for bankrupt crypto lender Celsius is investigating "allegations of misconduct," at the company, a lawyer for Celsius said Tuesday.

Joshua Sussberg of Kirkland & Ellis, the lawyer representing Celsius, said in a bankruptcy hearing that the two new board directors that Celsius appointed this summer — David Barse, the former CEO of Third Avenue Management, and Alan Carr, the founder of restructuring services firm Drivetrain — could "take remedial action" depending on the findings of their investigation.

The Celsius bankruptcy docket has swelled with hundreds of letters from Celsius users — its 1.7 million customers are its creditor base in the bankruptcy — with many suggesting they felt defrauded by the positive messaging of founders Alex Mashinsky and Nuke Goldstein.

Those letters pointed to cheery missives like a blog post from June titled, "Damn the Torpedoes, Full Speed Ahead," which assured Celsius users that the company "has the reserves" to serve them, that they can make withdrawals, and that the company has a "world-class risk management team."

"We try to read every one of these letters, and we take the accusations therein, as the court does, very seriously," Sussberg told the court. "If there's a there there, we are going to find out, and an investigation is being conducted."

Gregory Pesce of White & Case, who represents the creditors committee (which is made up of a group Celsius customers), told the court about its own investigation. The committee has enlisted M3 Partners as its financial advisors, and hired Elementus, a boutique blockchain consultant to aid its inquiry, Pesce told the court.

Elementus will "help us with the important task of tracking the movements of cryptocurrency on the blockchain so we can find out where the coins went and when, and find out if there's a way to bring them back to Celsius," Pesce said.

Celsius is also fielding inquiries from US state and federal agencies and foreign regulators, who are looking into the company's compliance with state and federal securities laws, Sussberg said. The company has also been cooperating with state lending and money transmitter authorities, he said.

Celsius faces an uncertain road ahead in the Chapter 11 bankruptcy process, where it could pursue a full scale reorganization, a potential sale of assets through bankruptcy, or a combination of both.

At Tuesday's hearing, Martin Glenn, chief judge of the US Bankruptcy Court for the southern district of New York, also acknowledged broader existential questions facing Celsius, as bereft customers clamored about lost savings. One customer told the court that he had less than $500 left in his checking account, having put most of his savings in Celsius.

"I know this case has generated a great deal of interest, and I think it's very important that the creditors, whether they're represented by counsel or not, have an opportunity to make their views known," Glenn said.