In a recent development, bankrupt crypto lender Celsius Network has obtained approval from the bankruptcy court to convert all non-Bitcoin and non-Ethereum altcoins into Bitcoin (BTC) and Ethereum (ETH) digital currencies. The decision, pronounced by Judge Martin Glenn of the Southern District of New York, allows for the liquidation of these assets, paving the way for distributing the funds to creditors in the near future.
Following discussions with the United States Securities and Exchange Commission (SEC), Celsius Network’s proposal gained official approval. As per the 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 Network faced bankruptcy due to the collapse of Terraform Labs and its associated tokens, Terra (LUNA) and TerraUSD (UST). The recent verdict has introduced new possibilities and extended the proceedings, providing hope for creditors awaiting resolution.
The decision to convert altcoins into BTC and ETH comes amidst the SEC’s crackdown on altcoins classified as securities, such as Cardano (ADA), Solana (SOL), and Polygon (MATIC).
Since the sale of Celsius Network to the crypto consortium Fahrenheit was approved in May 2023, the network has undergone a change in ownership. Under the stewardship of its new owners, the network now plans to develop a revised bankruptcy plan, with a focus on exclusively distributing assets in Bitcoin and Ethereum, excluding other tokens.
Similar platforms like Voyager Digital and FTX Derivatives Exchange also faced financial challenges following Celsius Network’s bankruptcy. These platforms are exploring unique strategies to address creditor demands for reimbursement.
The approval of the plan to convert altcoins into BTC and ETH brings new hope for the resolution of Celsius Network’s bankruptcy. It aligns with recent regulatory developments and aims to streamline the liquidation process, ensuring a more efficient distribution of funds to creditors.
Overall, by converting altcoins into BTC and ETH, Celsius Network aims to navigate its bankruptcy proceedings and provide a path forward for the company and its creditors in the cryptocurrency space.