The U.S. Trustee, a representative of the Department of Justice in bankruptcy proceedings, objected to bankrupt crypto exchange FTX’s plans to sell, stake and hedge its digital assets.

FTX filed a motion on Aug. 23 seeking the approval of the court to liquidate its over $3 billion in recovered crypto holdings and start returning funds to customers. It hopes that using a strategy of selling combined with staking and hedging won’t impact the value of assets too much as it tries to return funds to customers in fiat rather than as cryptocurrencies.

Facing an $8 billion shortfall in customer funds, FTX filed for bankruptcy in November last year. The exchange’s former CEO and co-founder Sam Bankman-Fried is facing charges from the Department of Justice including wire fraud, securities fraud and conspiracy to commit money laundering in relation to his operation of the exchange. Bankman-Fried has pleaded not guilty to all charges and his trial is set for Oct. 2.

In a court filing on Sep. 7, the U.S. Trustee objected to FTX’s August motion that outlined plans to sell, hedge and stake its digital assets. It objected to certain aspects of the management and monetization guidelines set out by FTX including its failure to notify parties other than the committee, which represents unsecured creditors, and the ad hoc committee, which represents non-US creditors, on any changes regarding the amount or type of cryptocurrency that may be sold.

“If there is a legitimate business reason why the debtors do not want to make such information public, the debtors should disclose that reason, but at minimum the U.S. Trustee should be included among those parties who will receive notice of any such change,” said Andrew Vara,  the U.S. Trustee representative in the case, in the filing.

The U.S. Trustee is an office within the Department of Justice that represents the government in bankruptcy proceedings. Its primary role is serving as “a watchdog” in proceedings, monitoring the conduct of bankruptcy parties.

FTX plans to sell a maximum of $100 million in digital assets per week but also said in its motion that it could increase to $200 million on a temporary basis with the approval of the committee and the ad hoc committee. The debtors intend to use a mix of strategies to avoid the recovery of crypto assets having an adverse effect on market prices.

As part of the objection, the U.S. Trustee said FTX was in violation of Local Rule 4001-2, which is a rule that applies to all cash collateral and financing requests under sections 363 and 364 of the bankruptcy code. The rule requires certain disclosures to be made in any motion that seeks financing including the amount of cash collateral the debtor requires as well as the pricing and economic terms.

“The debtors have not provided any of the disclosures specified above, or any of the other disclosures required by Local Rule 4001-2,” Vara said.

Under the local rule, the debtors have also not met their burden to demonstrate that super-priority administrative expenses are necessary to preserve the value of the estate, Vara said.

“If the Debtors are not currently in a position to make such disclosures because the hedging arrangements have not yet been made, or financing terms have yet to be finalized, the motion should be denied absent reasonable procedures requiring the debtors to file and serve the disclosures required by Local Rule 4001-2 in the future and giving parties in interest an opportunity to object to same,” Vara said.

A hearing on FTX’s motion is set for Sep. 13.