- Defunct crypto lender, Celsius Network, seeks court approval to liquidate altcoins, excluding those reserved for Withhold or Custody accounts, into Bitcoin and Ethereum as part of its Chapter 11 resolution plan.
- Despite approval from the Celsius Network Official Committee of Unsecured Creditors, the plan faces objections from the lawyer representing Celsius customers, citing alleged violations of consumer lending laws.
Embattled crypto lender, Celsius Network, has put forward a restructuring plan to settle outstanding claims as per Chapter 11 of the Bankruptcy Code. A notable element of this proposal is the network’s intention to liquidate all altcoin holdings—bar those earmarked for Withhold or Custody accounts—into Bitcoin and Ethereum. As detailed in the court filing, the conversions will be conducted using sound commercial efforts to maximize value. Subject to court approval, the conversion process will kick off on July 1.
This strategic pivot towards Bitcoin and Ethereum serves multiple purposes for Celsius. By focusing exclusively on these two dominant and highly-valued cryptocurrencies, the firm can simplify its operations and potentially minimize the costs related to managing a diverse portfolio of altcoins. Additionally, Bitcoin and Ethereum enjoy widespread acceptance and high liquidity in the crypto markets. This liquidity ensures the ease of buying and selling these assets as required, bypassing potential liquidity issues associated with lesser-known altcoins.
However, the plan has not been devoid of criticisms. David Adler, the legal representative for Celsius customers, has voiced significant concerns about the reorganization proposal. He argues that the plan runs afoul of both state and federal consumer lending laws. His objections primarily address the treatment of Retail Borrow Claims via Set Off Treatment. According to Adler, the company’s demand for loan repayments without intending to honor their contractual obligations—specifically, returning the collateral to borrowers—is in clear violation of consumer lending laws.
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Moreover, Adler took Celsius to task for their communication lapse with the borrower group for almost two months. He contests any further exclusivity extensions, insisting that Celsius must exhibit ’cause’ to warrant any extension.
While the reorganization plan has garnered approval from the Celsius Network Official Committee of Unsecured Creditors, opposing factions have the opportunity to lodge their objections electronically with the court. The court will review these objections in the June 28 hearing. It remains to be seen how these challenges will sway the court’s judgment and influence Celsius Network’s bankruptcy proceedings.
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