The bankruptcy court has approved bankrupt crypto lender, Celsius Network’s plan to convert all non-Bitcoin and non-Ethereum altcoins into Bitcoin (BTC) and Ethereum (ETH) digital currencies.
The new verdict in relation to the platform’s bankruptcy proceedings was pronounced by Judge Martin Glenn of the Southern District of New York and the liquidations will pave the way for the distribution of the funds to creditors in the near future.
Following discussions between Celsius Network handlers and the United States Securities and Exchange Commission (SEC), the proposal has been officially approved. As per the bankruptcy judge’s ruling, the troubled lender is authorized to:
“sell or convert any cryptocurrency assets, excluding tokens associated with Withhold or Custody accounts, into BTC or ETH starting from July 1, 2023.”
Celsius Network, which faced bankruptcy last year following the collapse of Terraform Labs and its associated tokens Terra (LUNA) and TerraUSD (UST), has left creditors waiting for resolution. Despite the bankruptcy filing months ago, the recent verdict has introduced new possibilities and extended the proceedings.
Amid recent SEC crackdowns on various altcoins, which the regulator has classified as securities, the decision to convert altcoins into BTC and ETH has emerged. Notable altcoins labeled as securities by the SEC include Cardano (ADA), Solana (SOL), and Polygon (MATIC).
Despite the ongoing presence of creditors, Celsius Network has undergone a change in ownership since its sale to the crypto consortium Fahrenheit was officially approved in May 2023. As a result, the network now operates under the stewardship of its new owners.
The recently revealed owners have announced their intention to develop a revised bankruptcy plan. Although specific details of these plans have yet to be disclosed, one certainty is that the Fahrenheit consortium will exclusively distribute the assets in Bitcoin and Ethereum, excluding any other tokens.
Following Celsius Network’s bankruptcy, similar platforms such as Voyager Digital and FTX Derivatives Exchange also faced financial challenges, prompting them to explore unique strategies to address creditor demands for reimbursement.