Celsius received authorization on Friday to initiate the liquidation of its altcoins , as the insolvent digital currency lender prepares to distribute assets exclusively in the two most widely adopted digital currencies, bitcoin (BTC) and ether (ETH).
Bankruptcy Judge Martin Glenn, presiding over the Southern District of New York, sanctioned this action, which was proposed by Celsius following consultations with the Securities and Exchange Commission (SEC). The SEC has recently asserted that several lesser-known digital tokens are classified as securities and require regulatory approval for handling.
According to the submitted document, the company has been engaging in regular discussions with the SEC and specific state regulatory agencies to ensure that the planned cryptocurrency distributions are fully compliant with applicable federal and state laws and regulations.
Celsius, which experienced a collapse in July 2022 and had its sale to the crypto consortium Fahrenheit approved in May, has stated that it is developing an updated bankruptcy plan that, with limited exceptions, excludes the distribution of cryptocurrencies to creditors other than BTC or ETH. The SEC has recently taken actions against major cryptocurrency exchanges, including Coinbase, Binance, and Bittrex, claiming that tokens associated with Polygon (MATIC), Near (NEAR), and Cardano (ADA) fall under securities regulations.
According to Judge Glenn's ruling, Celsius is permitted to sell or convert any cryptocurrency, crypto tokens, or other cryptocurrency assets, excluding those associated with Withhold or Custody accounts, into BTC or ETH starting from July 1, 2023.
Efforts to wind down the bankrupt cryptocurrency lender Voyager were hindered by SEC allegations that its VGX token might be considered a security. Consequently, Binance.US, which had proposed acquiring Voyager's assets, withdrew from the deal due to the resulting delays.
