A U.S. Bankruptcy Court for the Southern District of New York has approved an order for Celsius Network to convert its altcoins into Bitcoin and Ethereum.
As per the court order, Celsius would begin selling its altcoins held in non-custody creditors’ accounts on July 1.
More details on https://t.co/2XWwRMKE3L
— Celsians (@CelsiansNetwork) June 30, 2023
The order also states that Celsius should use commercially reasonable efforts to maximize the value of the altcoins, potentially meaning that they could remain with the firm until their value increases.
“Out of an abundance of caution, and without admitting the status of any particular token as a security under U.S. securities laws, the Debtors intend to sell or convert such tokens in compliance with applicable exemptions to U.S. securities laws, including SEC Rule 144 for tokens held by the Debtors for more than one year,” stated Celsius in the filing.
The decision to convert all creditors’ altcoins into two of the most highly-traded and liquid cryptocurrencies in the market would likely help Celsius ensure that they maximize value for creditors.
Celsius filed for Chapter 11 bankruptcy in July 2022 after suspending withdrawals, citing extreme market conditions brought about by the collapse of the Terra ecosystem. However, an independent examiner’s report released earlier this year found “rather serious problems” at the firm dated back to 2020, when Celsius began using customer assets to fund operational expenses and rewards.
In May, a consortium of buyers called Fahrenheit won a bid to acquire Celsius’ assets, valued at around $2 billion before the auction process began. Last month, lawyers for the firm filed an updated bankruptcy plan which was met with a considerable amount of creditor backlash.
“This proposed ‘treatment’ violates every consumer lending law out there (state, federal) and the ad hoc Borrower group will be opposing this plan,” tweeted David Adler, an attorney representing a group of Celsius borrowers, at the time.