The bankruptcy court has approved plans by bankrupt cryptocurrency lender Celsius Network to convert all non-Bitcoin and non-Ethereum altcoins into Bitcoin (BTC) and Ethereum (ETH) digital currencies.
The new verdict on the platform’s bankruptcy proceedings is obviously Proposed by Judge Martin Glenn of the Southern District of New York, the liquidation would pave the way for the near-term distribution of funds to creditors.
After discussions between Celsius Network Processors and the U.S. Securities and Exchange Commission (SEC), the proposal has been officially approved. According to a bankruptcy judge’s ruling, a troubled lender has the right to:
“From July 1, 2023, sell or convert any crypto assets (excluding tokens associated with withholding or escrow accounts) into BTC or ETH.”
Creditors are awaiting a resolution to Celsius Network facing bankruptcy following the collapse of Terraform Labs and its associated tokens Terra (LUNA) and TerraUSD (UST) last year. Despite filing for bankruptcy months ago, the recent judgment has introduced new possibilities and protracted proceedings.
Recently, the U.S. Securities and Exchange Commission (SEC) cracked down on various altcoins, which the regulator classifies as securities, and made the decision to convert altcoins into BTC and ETH. Notable altcoins marked as securities by the SEC include Cardano (ADA), Solana (SOL) and Polygon (MATIC).
Despite the continuation of creditors, the ownership of Celsius Network has changed since May 2023, when the sale to cryptocurrency consortium Fahrenheit was officially approved. As a result, the network is now operating under the management of a new owner.
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The recently revealed owners have announced their intention to create a revised bankruptcy plan. Although the exact details of these plans have not been disclosed, it is certain that the Fahrenheit Consortium will distribute Bitcoin and Ethereum assets exclusively, excluding any other tokens.
Following Celsius Network’s bankruptcy, similar platforms such as Voyager Digital and FTX Derivatives Exchange have also faced financial challenges, prompting them to explore unique strategies to meet creditor repayment demands.
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