In a significant turnaround, Celsius, a crypto lender battling bankruptcy, has gained the nod to begin liquidating its altcoins and converting them into the two most prominent cryptocurrencies, Bitcoin (BTC) and Ether (ETH).
The authorization comes as the company readies itself to distribute to its creditors, a process exclusively involving BTC and ETH. The crypto lender has been in dialogue with the SEC and certain state regulatory agencies regarding the proposed distribution of cryptocurrency under their new plan after its bankruptcy last year.
The approval, sanctioned on Friday by Bankruptcy Judge Martin Glenn of the Southern District of New York, emerged as a product of Celsius’ talks with the Securities and Exchange Commission (SEC). The regulatory body has recently articulated its viewpoint that several lesser-known crypto tokens are securities requiring regulated management.
According to Glenn’s ruling, starting July 1, 2023, Celsius can “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.”
Celsius’ recent documents revealed that the firm has been actively engaging with the SEC and certain state regulatory agencies. The dialogue has revolved around the proposed cryptocurrency distribution plan under the Plan to ensure full compliance with applicable federal and state laws and regulations.
Celsius, which saw its fortunes dip in July 2022 before securing an approved sale to the crypto consortium Fahrenheit in May, is in the process of drafting an updated bankruptcy plan. With a few exceptions, the plan is likely not to feature distributions of cryptocurrencies to creditors other than BTC and ETH.
Recent SEC actions have taken a toll on leading crypto exchanges such as Coinbase, Binance, and Bittrex. The regulatory body has suggested that tokens associated with Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall within the purview of securities regulation. This move reflects the tightening regulatory environment in the cryptocurrency industry and the commitment of companies like Celsius to work within these evolving parameters.
