Bankrupt crypto lender Celsius has been granted permission to liquidate its altcoins and convert them into Bitcoin (BTC) and Ether (ETH) starting July 1, 2023. This decision follows discussions with the Securities and Exchange Commission (SEC) and aims to ensure compliance with federal and state regulations.
Key Takeaways
- Permission Granted: Celsius can start converting altcoins to BTC and ETH from July 1, 2023.
- Regulatory Compliance: The move follows discussions with the SEC to ensure compliance with applicable laws.
- Distribution Plan: The distribution to creditors will be in BTC and ETH only.
- Bankruptcy Context: Celsius collapsed in July 2022 and is preparing an updated bankruptcy plan.
- SEC Actions: The SEC has recently taken action against major crypto exchanges, affecting tokens like MATIC, NEAR, and ADA.
Background
Celsius, a crypto lender that collapsed in July 2022, has been navigating bankruptcy proceedings and regulatory hurdles. The company’s sale to the crypto consortium Fahrenheit was approved in May, and it is now preparing an updated bankruptcy plan. This plan will primarily involve distributions in Bitcoin (BTC) and Ether (ETH), barring limited exceptions.
Regulatory Discussions
The decision to convert altcoins to BTC and ETH follows extensive discussions with the SEC. The SEC has recently classified a range of less-used crypto tokens as securities, requiring regulatory approval for their handling. Celsius has been in regular dialogue with the SEC and state regulatory agencies to ensure that the proposed distribution of cryptocurrency complies with all applicable federal and state laws.
Judge’s Ruling
Bankruptcy Judge Martin Glenn of the Southern District of New York approved Celsius’s proposal to liquidate its altcoins. According to the ruling, Celsius “may sell or convert any non-BTC and non-ETH cryptocurrency, crypto tokens, or other cryptocurrency assets other than such tokens that are associated with Withhold or Custody accounts … to BTC or ETH commencing on or after July 1, 2023.”
SEC’s Broader Actions
The SEC has been active in regulating the crypto space, recently taking action against major crypto exchanges such as Coinbase, Binance, and Bittrex. Tokens linked to Polygon (MATIC), Near (NEAR), and Cardano (ADA) have been identified as falling under securities regulation. These regulatory actions have had significant impacts on the crypto industry, including delays in plans to wind down bankrupt crypto lender Voyager.
Future Implications
Celsius’s ability to convert altcoins to BTC and ETH marks a significant step in its bankruptcy proceedings. The move aims to streamline the distribution process to creditors and ensure regulatory compliance. As the crypto industry continues to face regulatory scrutiny, the outcomes of such decisions will likely influence future bankruptcy proceedings and regulatory approaches in the sector.
