Bankrupt Celsius can now convert its altcoins under management into Bitcoin (BTC) and Ether (ETH), thanks to a ruling by its New York bankruptcy court. The move may be a consequence of the Securities and Exchange Commission’s (SEC) aggressive policy towards certain cryptocurrencies, which it considers to be financial securities.
Celsius follows the SEC’s lead
Last month, an American institution made its mark on the international cryptocurrency industry: the Securities and Exchange Commission (SEC). The regulator of the financial markets on American territory had declared that many altcoins, such as BNB, ADA, SOL and MATIC, were to be considered as « securities ».i.e. securities.
In this context, the Bankruptcy Court for the Southern District of New York has just authorized the owners of Celsius to convert altcoins on their platform into Bitcoin (BTC) and Ether (ETH).
« Debtors, in consultation with the Committee’s advisors, may sell or convert any non-BTC and non-ETH cryptocurrencies, tokens or other digital assets that are associated with hold or custody accounts (collectively referred to as « Altcoins ») into BTC or ETH as of July 1, 2023. «
As a reminder, in May 2023, the Fahrenheit consortium won the auction to buy out Celsius. Thus, the future owners of the platform, formerly specialized in cryptocurrency loans, intend to revise the platform’s initial bankruptcy plan, starting with this operation aimed directly at altcoins.
Celsius isn’t the only platform to move away from altcoins due to SEC attacks. Most recently, neobank Révolut has also, stopped offering certain cryptocurrencies in response to the SEC’s actions..
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A look back at the bankruptcy of Celsius
In 2022, investors lived one of the biggest domino effects that could have occurred on the Web3. The company that brought down many companies behind it was undoubtedly Terraform Labs, with the collapse of its two cryptocurrencies formerly valued at $40 billion.
The fall of the Terra ecosystem (LUNA) caused that of cryptocurrency lender Celsius. In July 2022, after weeks of tension generated by multiple rumors, the U.S.-based company finally gave in and declared bankruptcy.
In addition to the general discontent linked to the platform’s suspension of withdrawals, certain revelations have worsened Celsius’ position in the cryptocurrency industry. In addition, the company’s founder, Alex Mashinsky, allegedly withdrew $10 million from Celsius two months before its bankruptcy filing.
However, the worst was yet to come. Almost 4 days after this announcement, a 14,500-page document began circulating on the Web. It contained the personal data of several thousand users, with their names, transactions and cryptocurrency balances.
Today, Celsius tries to rise from the ashes with its potential takeover by Fahrenheit. If the deal is approved by US regulators, the platform will benefit from $400-500 million in cryptocurrency, as well as new mining facilities.
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Published by Éditions Larousse
Source: New York Bankruptcy Court
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A lifelong enthusiast for new technologies, I gradually became involved in Web3 activities in the year 2021. As time went by, I wanted to do my bit. That’s when I became a writer, with a view to explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
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