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The Bankruptcy Court has approved a bankrupt cryptocurrency lender, Celsius Network’s plan to convert all altcoins other than Bitcoin and Ethereum into the digital currencies Bitcoin (BTC) and Ethereum (ETH).
A new verdict regarding the platform’s bankruptcy proceedings has been announced by Judge Martin Glenn of the Southern District of New York, and the liquidation will pave the way for the distribution of funds to creditors in the near future.
Following discussions between Celsius Network processors and the US Securities and Exchange Commission (SEC), the proposal was formally approved. By decision of a bankruptcy judge, a problem creditor has the right to:
“sell or convert any cryptocurrency assets, excluding tokens associated with a holding or custody account, into BTC or ETH starting July 1, 2023.”
Celsius Network, which faced bankruptcy last year following the collapse of Terraform Labs and its associated Terra (LUNA) and TerraUSD (UST) tokens, has left lenders pending a decision. Despite filing for bankruptcy a few months ago, the recent verdict opened up new opportunities and extended the proceedings.
Amid the recent SEC crackdown on various altcoins that the regulator has classified as securities, a decision has emerged to convert altcoins into BTC and ETH. Notable altcoins labeled as securities by the SEC include Cardano (ADA), Solana (SOL), and Polygon (MATIC).
Despite the continued presence of lenders, Celsius Network underwent a change of ownership after its sale to the Fahrenheit cryptocurrency consortium was officially approved in May 2023. As a result, the network is now operated by its new owners.
Related: Celsius creditors claim Wintermute facilitated ‘dummy trade’ – report
The newly identified owners have announced their intention to develop a revised bankruptcy plan. Although the specific details of these plans have yet to be revealed, it is safe to say that the Fahrenheit consortium will distribute assets exclusively in bitcoin and ethereum, to the exclusion of any other tokens.
Following the bankruptcy of Celsius Network, similar platforms such as Voyager Digital and FTX Derivatives Exchange also ran into financial trouble, prompting them to explore unique strategies to meet creditor claims for reimbursement.