Bankrupt crypto lender Celsius has been granted permission to start liquidating 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 prepare for a distribution to creditors.
Key Takeaways
- Permission Granted: Celsius can liquidate altcoins and convert them to BTC and ETH.
- Effective Date: The conversion can start on or after July 1, 2023.
- Regulatory Compliance: The move follows discussions with the SEC to ensure compliance with federal and state laws.
- Distribution Plan: The updated bankruptcy plan will primarily involve distributions in BTC and ETH.
Background
Celsius, a crypto lender that collapsed in July 2022, has been navigating bankruptcy proceedings. The company’s sale to crypto consortium Fahrenheit was approved in May 2023. As part of its bankruptcy plan, Celsius proposed liquidating its altcoins to distribute assets to creditors in the form of BTC and ETH.
Court Approval
Bankruptcy Judge Martin Glenn of the Southern District of New York approved Celsius’s proposal. The ruling allows Celsius to sell or convert any non-BTC and non-ETH cryptocurrency assets, except those associated with Withhold or Custody accounts, starting July 1, 2023.
Regulatory Discussions
Celsius has been in regular dialogue with the SEC and certain state regulatory agencies to ensure that the proposed distribution of cryptocurrency complies with applicable laws and regulations. The SEC has recently taken action against major crypto exchanges, emphasizing the need for regulatory approval for handling certain crypto tokens.
Impact on Creditors
The updated bankruptcy plan, barring limited exceptions, will not involve distributions of cryptocurrencies other than BTC or ETH. This move aims to streamline the distribution process and ensure compliance with regulatory requirements.
SEC’s Stance on Crypto Tokens
The SEC has recently targeted major crypto exchanges like Coinbase, Binance, and Bittrex, stating that tokens linked to Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall under securities regulation. This regulatory scrutiny has impacted other bankrupt crypto firms, such as Voyager, whose plans were delayed due to SEC claims that its VGX token could be considered a security.
Conclusion
Celsius’s ability to convert altcoins to BTC and ETH marks a significant step in its bankruptcy proceedings. The move aims to ensure regulatory compliance and streamline the distribution process to creditors, primarily in the form of BTC and ETH.
