The United States Bankruptcy Court for the Southern District of New York has approved bankrupt crypto lender Celsius Network's plan to convert its altcoins into Bitcoin (BTC) and ether (ETH).
the order was issued by Judge Martin Glenn, and the liquidations will pave the way for the distribution of funds to creditors in the near future.
The proposal was officially approved after discussions between Celsius and the US Securities and Exchange Commission (SEC). Under the bankruptcy judge's ruling, the troubled lender is authorized to:
"Sell or convert any cryptocurrency asset, except tokens associated with Hold or Custody accounts, into BTC or ETH on or after July 1, 2023."
Celsius who faced bankruptcy in 2022 after the collapse of the Terra ecosystem and its Terra (LUNA) and TerraUSD (UST) tokens, has left creditors waiting for a resolution. Despite the bankruptcy filing months ago, the recent verdict has introduced new possibilities and expanded proceedings.
Amid the recent SEC crackdown on altcoins, which the regulator has classified as securities, many cryptocurrency firms are deciding to convert altcoins into BTC and ETH. Notable altcoins labeled as securities by the SEC include Cardano(ADA), Solana (SUN) and polygon (MATIC).
Despite ongoing bankruptcy proceedings, Celsius was recently Bought by the Fahrenheit Crypto Consortium in May 2023. The network now operates under the management of its new owners.
Related: Celsius Creditors Allege Wintermute Facilitated 'Wash Trade' - Report
The new owners have announced their intention to develop a revised bankruptcy plan. Although the specific details of these plans have yet to be revealed, it is now clear that the owners will exclusively distribute the assets in Bitcoin and Ether.
After the bankruptcy of Celsius Network, companies like Voyager Digital and FTX faced financial challengesprompting them to explore unique strategies to address creditor repayment demands.
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