The impending liquidations open a pathway for creditors to receive their funds in the near future.
The United States Bankruptcy Court for the Southern District of New York has given a green light to Celsius Network’s proposal to convert its altcoin reserves into Bitcoin (BTC, $30,662) and Ethereum (ETH, $1,949), amidst its ongoing bankruptcy proceedings. The directive, issued by Judge Martin Glenn, forms a significant step towards reimbursing the creditors of the defunct crypto lending platform.
After detailed discussions between Celsius Network and the U.S. Securities and Exchange Commission (SEC), the bankruptcy judge formally endorsed the strategy. According to the ruling, the embattled lender is now permitted to:
“Commence the sale or conversion of any cryptocurrency assets, with the exception of tokens tied to Withhold or Custody accounts, into BTC or ETH starting July 1, 2023.”
Having declared bankruptcy in 2022 due to the downfall of the Terra ecosystem and the associated Terra (LUNA) and TerraUSD (UST) tokens, Celsius Network has left its creditors in a state of anticipation. Although the bankruptcy was declared months ago, the recent verdict has opened new doors and elongated the proceedings.
With the SEC tightening the reins on altcoins, which the regulatory body has designated as securities, an increasing number of crypto firms are opting to swap their altcoins for BTC and ETH. Some of the prominent altcoins labeled as securities by the SEC include Cardano (ADA, $0.293), Solana (SOL, $19), and Polygon (MATIC, $0.6847).
In the midst of its ongoing bankruptcy proceedings, Celsius Network was acquired by the crypto consortium, Fahrenheit, in May 2023. The platform now operates under the watchful eyes of its new custodians.
The new owners have expressed their intent to devise a revamped bankruptcy plan. While the specifics of these proposals remain under wraps, it is now evident that the owners plan to distribute the assets solely in Bitcoin and Ethereum.
In the wake of the Celsius Network’s bankruptcy, other companies such as Voyager Digital and FTX have encountered financial hurdles, thereby inciting them to consider novel strategies to meet the creditor demands for reimbursement.