In order to prepare for a payout to creditors that would only be made in the two most popular cryptocurrencies, bitcoin (BTC) and ether (ETH), bankrupt cryptocurrency lender Celsius was given authorization on Friday to begin liquidating its altcoins.Following conversations with the Securities and Exchange Commission (SEC), which recently declared a variety of less popular crypto tokens to be securities whose handling requires regulatory clearance, bankruptcy judge Martin Glenn of the Southern District of New York accepted the move, suggested by Celsius.
According to Glenn’s decision, Celsius “may sell or convert any non-BTC and non-ETH cryptocurrency, crypto tokens, or other cryptocurrency assets to BTC or ETH beginning on or after July 1, 2023, other than such tokens that are associated with Withhold or Custody accounts.”In order to make sure that all proposed distributions of cryptocurrency under the Plan are in complete compliance with all relevant federal and state laws and regulations, the company has “been in regular dialogue with the Securities and Exchange Commission (the “SEC”) and certain state regulatory agencies,” the filing stated.
The cryptocurrency consortium Celsius, whose sale to Fahrenheit was confirmed in May after it folded in July 2022, claims it is putting up a new bankruptcy plan that won’t distribute cryptocurrencies to creditors besides BTC or ETH, excluding a small number of exceptions.
Since tokens related to Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall under securities legislation, the SEC has lately taken action against prominent cryptocurrency exchanges like Coinbase, Binance, and Bittrex.Recent efforts to wind down the insolvent cryptocurrency lender Voyager were thwarted by SEC allegations that its VGX token might be a security.Delays as a result forced Binance.US, which had offered to purchase Voyager’s assets, to withdraw.