Bankrupt Crypto Lender Celsius Receives Court Approval to Convert Altcoins into Bitcoin and Ethereum

In a significant development, a US judge has ruled in favor of bankrupt crypto lender Celsius, permitting the conversion of its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH). The decision comes as a relief to Celsius, allowing them to navigate their financial challenges more effectively.

Judge Martin Glenn of the Southern District of New York issued the ruling, granting Celsius the ability to convert all non-BTC and non-ETH cryptocurrencies into the two leading digital assets.

The conversion process is slated to commence on July 1st and continue until the effective date of the plan.

The court has specified that Celsius must employ “commercially reasonable methods” to maximize the value of the altcoins during the conversion process.

Additionally, the company is required to provide monthly reports detailing the number of altcoins converted to Bitcoin and Ethereum.

Celsius filed for bankruptcy in July 2022 after experiencing a significant decline in the value of its native asset, leading to an inability to fulfill customer withdrawals.

Subsequently, the firm faced a class-action lawsuit, accusing it of operating as a Ponzi scheme. Among the individuals named in the lawsuit was Alex Mashinsky, the former CEO of Celsius.

Earlier this year, New York State Attorney General Letitia James sued Mashinsky, alleging that he made misleading statements to investors and failed to comply with state registration requirements.

The lawsuit highlighted Mashinsky’s practice of lending assets to high-risk counterparties, which contradicted his representations of low-risk investments in reputable companies.