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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 to bitcoin (BTC) and ether (ETH).
order was Issued by Judge Martin Glenn, and the liquidation will pave the way for the distribution of funds to creditors in the near future.
Following discussions between Celsius and the US Securities and Exchange Commission (SEC), the proposal was officially approved. Per the bankruptcy judge’s decision, the distressed lender is authorized to:
“Starting July 1, 2023, sell or convert any crypto assets into BTC or ETH, except tokens held in withholding or custody accounts.”
Celsius, which faces bankruptcy in 2022 The collapse of the Terra ecosystem and its Terra (LUNA) and TerraUSD (UST) tokens has left creditors waiting for resolution. Despite the bankruptcy filing months ago, the recent decision has opened up new possibilities and escalated the proceedings.
Amid the recent SEC crackdown on altcoins, which are classified as securities by the regulator, many crypto companies are making the decision to convert altcoins to BTC and ETH. Notable altcoins that have been labeled as securities by the SEC include Cardano (ADA), Solana (SOL), and Polygon (MATIC).
Despite ongoing bankruptcy proceedings, Celsius was recently purchased by crypto consortium Fahrenheit in May 2023. The network now operates under the leadership of its new owners.
Connected: Celsius creditors allege Wintermute facilitated ‘wash trading’ – report
The recently revealed owners have announced their intention to develop a revised bankruptcy plan. While specific details of these plans have yet to be revealed, one certainty is that the Fahrenheit Consortium will distribute assets exclusively in bitcoin and ethereum, to the exclusion of any other token.
Following the bankruptcy of Celsius Network, similar platforms such as Voyager Digital and the FTX derivatives exchange also faced financial challenges, prompting them to explore unique strategies to meet creditors’ demands for reimbursement.
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