In an unexpected turn of events, the United States Bankruptcy Court for the Southern District of New York has permitted debtors of Celsius to swap their altcoins for prominent cryptos, Bitcoin and Ether. This decision, an outcome of discussions between Celsius and the US SEC, anticipates the distribution of funds to creditors taking place shortly.
Interestingly, selling or trading tokens tied to Withhold or Custody accounts are forbidden under the given order. This move surfaces in the wake of the bankruptcy filing by Celsius, reacting to the whopping $10 billion liabilities revealed post the financial debacle of Terra in mid-July 2022.
The sinking crypto lending platform was rescued by the crypto consortium, Fahrenheit, who took ownership on May 25, 2023. With undefined plans to resuscitate the languishing Celsius Network, speculation surrounds Fahrenheit’s intent to exclusively distribute assets in Bitcoin and Ether. Their acquisition grants Fahrenheit exclusivity over the institutional loan portfolio, staked cryptocurrencies, mining unit, and other investments of the Celsius Network. The agreement implies that the liquid cryptocurrency assets expected to land in Fahrenheit’s account range between $450 million and $500 million.
Desperate times call for desperate measures. Following its acquisition, Celsius plans to negotiate new plan sponsor agreements with Fahrenheit and BRIC, seeking legal approval for the deployment of a recovered Chapter 11 plan and a disclosure statement.
The onset of the US SEC’s stringent rules on crypto exchanges and altcoins sparks off the authorization of Celsius network’s debtors to pivot their altcoins to Bitcoin and Ether. The wave of tightening regulations has already categorized over 160 cryptocurrencies, including popular ones like Cardano, Polygon, and Solana, as securities. Consequently, several crypto enterprises are now considering the switch from altcoin holdings to Bitcoin and Ether.
In summary, the future of the crypto market, although promising, isn’t insulated from regulatory storms and financial tumult. The peculiar case of Celsius underscores both the potential and the pitfalls that characterize the crypto industry. The story beckons us to ponder upon a fundamental question – Will such incidents discourage new market entrants or encourage them to build robust contingency plans? While the former stunts market growth, the latter might just make it more resilient. As always, only time will tell.
Source: Cryptonews
