US Judge Grants Celsius, a Bankrupt Crypto Lender, Permission to Convert Altcoins to Bitcoin and Ethereum for Financial Relief
In a significant development, Judge Martin Glenn of the Southern District of New York has ruled that Celsius, the struggling crypto firm, can convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH) as a means of financial recovery. The decision, outlined in a recent court document, allows the company to commence the conversions from July 1st, 2023, and continue until the effective date of the financial plan.
The ruling specifies that Celsius, in consultation with the advisors to the Committee, has the authority to sell or convert any cryptocurrencies other than BTC and ETH, collectively referred to as ‘altcoins.’ This move aims to optimize the company’s financial position amid its bankruptcy proceedings.
To ensure transparency and accountability, Celsius must employ “commercially reasonable methods” to maximize the value of the altcoins before converting them to BTC or ETH. Additionally, the company is obligated to provide monthly reports detailing the amount of altcoins successfully converted to Bitcoin and Ethereum, as stated in the report.
Celsius’ financial troubles began when its native asset experienced a drastic decline of over 99%, leading to insurmountable customer withdrawal issues and ultimately filing for bankruptcy in July 2022. Subsequently, the company faced a class-action lawsuit alleging its operations resembled a Ponzi scheme, with top executives, including former CEO Alex Mashinsky, accused of orchestrating the alleged fraud.
Early in 2023, New York State Attorney General Letitia James sued Mashinsky, alleging that he misled investors and failed to comply with state registration requirements. The lawsuit claimed that Mashinsky had misrepresented investments as low-risk and primarily focused on reputable companies when, in reality, the firm routinely lent assets to high-risk counterparties.
With this court ruling, Celsius seeks to address its financial challenges by leveraging the growing prominence of Bitcoin and Ethereum in the cryptocurrency market while complying with regulatory measures. As the company implements its conversion strategy, it remains under scrutiny, and the crypto community closely monitors its progress toward financial recovery.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.