Monday, October 2, 2023

US Judge Grants Bankrupt Crypto Lender Celsius Greenlight To Convert Altcoins Into Bitcoin and Ethereum

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A US judge is ruling that bankrupt crypto lender Celsius may convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH) as a form of financial relief.

In a new court document, Judge Martin Glenn of the Southern District of New York has ruled that starting on July 1st, the troubled crypto firm will be allowed to convert all non-BTC and non-ETH cryptocurrencies into the top two digital assets by market cap.

“The Debtors, in consultation with the advisors to the Committee, 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 (collectively, the ‘altcoins’), to BTC or ETH commencing on or after July 1, 2023, and ending prior to the effective date of the plan.”

Celsius must also use “commercially reasonable methods” to attempt to maximize the value of the altcoins they want to convert to BTC or ETH. Furthermore, the company must provide a monthly report on the amount of altcoins they convert to Bitcoin and Ethereum, according to the report.

Celsius originally filed for bankruptcy in July 2022 after its native asset plummeted by over 99% and it was unable to fulfill customer withdrawals.

Soon afterward, the firm was hit with a class action lawsuit that alleged it was operated as a “literal” Ponzi scheme, naming many of its executives, including Alex Mashinsky, who at the time was the company’s CEO, as the perpetrators.

Early in 2023, New York State Attorney General Letitia James sued Mashinsky for allegedly making misleading statements to investors and failing to properly register as required by state law.

According to James, the former chief executive told investors that he would only be making low-risk investments in reputable companies. However, he routinely loaned assets to high-risk counterparties.

In May, Mashinsky responded, saying that James’ allegations were based on misinformation.

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