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The United States Bankruptcy Court for the Southern District of New York has approved bankrupt 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 distribution of the funds to creditors in the near future.
The proposal was officially approved after discussions between Celsius and the U.S. Securities and Exchange Commission (SEC). As per the bankruptcy judge’s ruling, the troubled lender is authorized to:
“Sell or convert any cryptocurrency assets, excluding tokens associated with Withhold or Custody accounts, into BTC or ETH starting from July 1, 2023.“
Celsius, which faced bankruptcy in 2022 following the collapse of the Terra ecosystem and its Terra (LUNA) and TerraUSD (UST) tokens, has left creditors waiting for a resolution. Despite the bankruptcy filing months ago, the recent verdict has introduced new possibilities and extended the proceedings.
Amid the recent SEC crackdown on altcoins, which the regulator has classified as securities, many crypto companies are deciding 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 ongoing bankruptcy proceedings, Celsius was recently purchased by the crypto consortium Fahrenheit in May 2023. The network now operates under the stewardship of its new owners.
Related: Celsius creditors allege 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 yet to be disclosed, it’s now clear that the owners will exclusively distribute the assets in Bitcoin and Ether.
Following the Celsius Network’s bankruptcy, companies such as Voyager Digital and FTX faced financial challenges, prompting them to explore unique strategies to address creditor demands for reimbursement.
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