Benzinga – Beleaguered crypto lending platform Celsius, which filed for bankruptcy in July 2022, received the green light to begin liquidating its cryptocurrency holdings in preparation for distribution to its creditors.
The authorization was granted by Bankruptcy Judge Martin Glenn of the Southern District of New York.
This development came about following Celsius’s proposal, which came out of consultations with the U.S. Securities and Exchange Commission (SEC).
The SEC has recently opined that many lesser-known cryptocurrencies should be categorized as securities and, as such, should be subjected to regulatory oversight concerning their management.
According to Judge Glenn’s ruling, Celsius “may sell or convert any non-BTC and non-ETH cryptocurrency, crypto tokens, or other cryptocurrency assets other than such tokens that are associated with Withhold or Custody accounts … to BTC or ETH commencing on or after July 1, 2023.”
This means that the altcoins can be sold or converted into Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), the two most prominent cryptocurrencies.
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The company stated it engaged in regular communications with the SEC and various state regulatory bodies regarding the planned cryptocurrency distribution under the bankruptcy plan.
This is to “ensure that all such distributions are in full compliance with applicable federal and state laws and regulations,” as stated in the filing.
Celsius is said to be working on an updated bankruptcy plan which, apart from a few exceptions, will not entail any cryptocurrency distributions to creditors apart from Bitcoin and Ethereum.
This ruling comes amid a period of heightened scrutiny by the SEC on the cryptocurrency market.
Major cryptocurrency exchanges such as Coinbase Global Inc (NASDAQ: COIN), Binance (CRYPTO: BNB) and Bittrex have faced actions by the SEC.
The regulatory body asserted that tokens associated with Polygon (CRYPTO: MATIC), Near (CRYPTO: NEAR) and Cardano (CRYPTO: ADA) are subject to securities regulations.
In addition, it’s noteworthy that Celsius, which went bankrupt in July 2022, had its sale approved to crypto consortium Fahrenheit in May 2023.
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