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 move follows discussions with the Securities and Exchange Commission (SEC) and aims to prepare for a distribution to creditors.
Key Takeaways
- Celsius can convert altcoins to BTC and ETH starting July 1, 2023.
- The decision follows discussions with the SEC.
- The distribution to creditors will be in BTC and ETH only.
- Bankruptcy Judge Martin Glenn approved the move.
- The SEC has recently taken action against major crypto exchanges.
Background
Celsius, a crypto lender that collapsed in July 2022, has been in regular dialogue with the SEC and certain state regulatory agencies to ensure that the proposed distribution of cryptocurrency complies with federal and state laws. The company’s sale to crypto consortium Fahrenheit was approved in May, and it is now preparing an updated bankruptcy plan.
Court Approval
Bankruptcy Judge Martin Glenn of the Southern District of New York approved Celsius’s proposal to liquidate its altcoins. The ruling allows Celsius to sell or convert any non-BTC and non-ETH cryptocurrency assets to BTC or ETH starting July 1, 2023. This decision is part of Celsius’s efforts to ensure that all distributions to creditors are in compliance with applicable laws.
SEC Involvement
The SEC has recently taken action against major crypto exchanges such as Coinbase, Binance, and Bittrex, stating that tokens linked to Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall under securities regulation. This regulatory scrutiny has influenced Celsius’s decision to limit distributions to BTC and ETH.
Future Plans
Celsius is preparing an updated bankruptcy plan that will, with limited exceptions, involve distributions of cryptocurrencies to creditors solely in BTC or ETH. This move aims to streamline the distribution process and comply with regulatory requirements.
Impact on Creditors
Creditors of Celsius can expect to receive their distributions in BTC and ETH, which are the two most widely used cryptocurrencies. This decision is expected to provide a more stable and compliant distribution process, aligning with the SEC’s regulatory framework.
Conclusion
The approval for Celsius to convert altcoins to BTC and ETH marks a significant step in the company’s bankruptcy proceedings. By working closely with the SEC and adhering to regulatory guidelines, Celsius aims to ensure a fair and compliant distribution to its creditors.
