Bankrupt crypto lender Celsius Network has been granted permission to convert its altcoin holdings into bitcoin (BTC) and ethereum (ETH). The move will allow the company to distribute funds to its creditors in the two most widely used cryptocurrencies.
Celsius Network, a bankrupt crypto lender, has been approved by the US Bankruptcy Court for the Southern District of New York to convert its altcoins into bitcoin or ether.
The court order, issued by Judge Martin Glenn on June 30, allows Celsius to sell all its altcoins starting July 1, 2023.
The decision to convert altcoins to bitcoin or ethereum is a strategic move by Celsius as it seeks to maximize the value of its assets, as BTC and ETH are the two most liquid cryptocurrencies. Converting its altcoins to these two assets will allow Celsius to generate more liquidity and improve its chances of repaying the numerous victims of its misfortune.
The court order also allows Celsius to use commercially reasonable efforts to maximize the value of the altcoins that it cannot sell at the moment. This means that Celsius could potentially hold onto some of its altcoins hoping that their prices will recover.
The approval to convert altcoins or sell their cryptocurrency assets, except for tokens linked to Withhold or Custody accounts, is a positive development for Celsius as it seeks to restructure its business and emerge from bankruptcy.
The Celsius saga
After encountering financial difficulties due to the collapse of Do Kwon’s Terra ecosystem and its associated tokens, namely Terra (LUNA) and the TerraUSD (UST) algorithmic stablecoin, Celsius has left its creditors in a state of anxiety.
In July 2022, Celsius Network sought Chapter 11 bankruptcy protection after temporarily suspending withdrawals in June 2022, citing extreme market conditions. The company’s bankruptcy filings indicate that retail customers will bear the primary impact of its financial downfall.
Despite the bankruptcy filing, the recent verdict has brought forth fresh possibilities and a glimmer of hope for platform users.
Last May, Celsius found a new home when it was acquired by the crypto consortium called Fahrenheit. With this acquisition, Celsius now operates under the guidance and ownership of the company.
The new owners of Celsius have revealed their plans to create a revised bankruptcy plan. While the specific details of these plans have not been disclosed yet, it is apparent that the owners will distribute the assets exclusively in BTC and ETH.
In the aftermath of the Celsius Network’s bankruptcy, other companies like Voyager Digital, Vauld, FTX, and many more have also encountered financial difficulties, leading them to explore innovative strategies to completely meet creditor demands for repayment or shutter operations.