The United States Bankruptcy Court for the Southern District of New York has granted approval for Celsius Network, a bankrupt cryptocurrency lender, to convert its altcoins into Bitcoin.
The decision was made by Judge Martin Glenn, and the liquidation process will pave the way for the distribution of funds to creditors in the near future.
The approval of this proposal came after extensive discussions between Celsius and the U.S. Securities and Exchange Commission (SEC).
According to the ruling of the bankruptcy judge, the struggling lender is now authorized to sell or convert any cryptocurrency assets, with the exception of tokens associated with Withhold or Custody accounts, into Bitcoin (BTC) or Ether (ETH) starting from July 1, 2023.
Celsius Network faced bankruptcy in 2022 following the collapse of the Terra ecosystem, which affected its Terra (LUNA) and TerraUSD (UST) tokens.
Creditors have been awaiting a resolution since the bankruptcy filing several months ago, and this recent approval opens up new possibilities and extends the ongoing proceedings.
In light of the recent regulatory crackdown by the SEC on altcoins, which the regulator has categorized as securities, many cryptocurrency companies are opting to convert their altcoins into BTC and ETH.
Notable altcoins that have been labeled as securities by the SEC include Cardano.
Despite the ongoing bankruptcy proceedings, Celsius Network was acquired by the crypto consortium Fahrenheit in May 2023.
Under the stewardship of its new owners, the network continues to operate.
The new owners have announced their intention to develop a revised bankruptcy plan, although specific details of these plans have not yet been disclosed.
However, it is now clear that the assets will be exclusively distributed in Bitcoin and Ether.
Following Celsius Network’s bankruptcy, other companies in the cryptocurrency industry, such as Voyager Digital and FTX, have also faced financial challenges.
As a result, they have been exploring unique strategies to address the demands of their creditors for reimbursement.
In summary, the United States Bankruptcy Court’s approval for Celsius Network to convert its altcoins into Bitcoin marks a significant step towards resolving the lender’s bankruptcy proceedings.
With the involvement of the SEC and the acquisition by Fahrenheit, the network is now moving forward under new ownership and is expected to distribute its assets in BTC and ETH.
This development reflects a broader trend in the industry as crypto companies grapple with regulatory concerns and seek solutions to address creditor demands.
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