The U.S. Bankruptcy Court for the Southern District of New York has approved insolvent crypto lender Celsius Network’s plan to convert its altcoins into bitcoin (BTC) and ether (ETH).
The order was issued by Judge Martin Glenn and the liquidations will pave the way for the funds to be distributed to creditors soon.
The proposal was officially approved following discussions between Celsius and the US Securities and Exchange Commission (SEC). According to the bankruptcy judge’s decision, the troubled lender is entitled to:
“Starting July 1, 2023, sell or convert all cryptocurrency assets, excluding tokens, associated with withhold or custody accounts to BTC or ETH.”
Celsius, which faced bankruptcy in 2022 following the collapse of the Terra ecosystem and its Terra (LUNA) and TerraUSD (UST) tokens, leaves creditors waiting for a resolution. Despite filing for bankruptcy months ago, the recent ruling has opened up new opportunities and lengthened the process.
The approved court order regarding the conversion of altcoins (screenshot). Source: Cases.stretto.com
With the SEC’s recent crackdown on altcoins classified as securities by the regulator, many crypto companies are deciding to convert altcoins into BTC and ETH. Notable altcoins classified as securities by the SEC include Cardano (ADA), Solana (SOL), and Polygon (MATIC).
Despite ongoing bankruptcy proceedings, Celsius was recently purchased by crypto consortium Fahrenheit in May 2023. The network is now under the direction of its new owners.
Related: Celsius Creditors Claim Wintermute Facilitated ‘Wash Trading’ – Report
The new owners have announced their intention to develop a revised bankruptcy plan. Although specific details of these plans have not yet been announced, it is now clear that the owners will allocate the assets solely in bitcoin and ether.
Following the Celsius Network’s bankruptcy, companies like Voyager Digital and FTX faced financial challenges, prompting them to devise unique strategies to meet creditors’ recovery demands.
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