- Bankrupt crypto lending platform Celsius announces a reorganization plan to convert all altcoin holdings, except those in Custody and Withhold accounts, into Bitcoin and Ethereum.
- If approved by the court, the massive conversion could trigger a significant dump in the altcoin market, with the process set to commence as early as July 1st.
In the world of digital assets, seismic shifts are underway as defunct crypto lender, Celsius, unveils an audacious reorganization plan. The company has filed with the court to convert all its altcoin holdings, except those in Custody and Withhold accounts, into Bitcoin and Ethereum, thereby signaling a possible market dump.
Despite the recent setback in large market cap crypto assets due to their classification as securities by the U.S. Securities and Exchange Commission (SEC), the altcoin sector managed to weather the storm. However, Celsius’s recent move threatens to destabilize altcoins, given the company’s impending altcoin liquidation.
According to a tweet by the company,
“Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.”
The conversion, the company said in its court filings, will be executed using commercially reasonable efforts to achieve maximum value for the altcoins.
Should the court approve this, the conversion process could kick off as early as the first day of July. However, the proposal has already met significant opposition. David Adler, from the law firm McCarter & English, asserts that the plan contravenes consumer lending laws, as the bankrupt lender is refusing to return collateral.
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Adler explains,
“Under the Plan, the Debtors have elected to treat the Retail Borrow Claims through the Set Off Treatment… the Debtors have no intention whatsoever of performing their contractual obligations (i.e., returning the collateral to the borrowers).”
Adding to the criticism, Adler expressed concern over Celsius Network’s lack of communication with the borrower group over the past 6 to 7 weeks. He argues against extending exclusivity to Celsius Network Debtors due to their uncommunicative behavior and for failing to demonstrate progress in the case.
The proposal from Celsius, if approved, may generate unprecedented ripples in the altcoin market. Stakeholders are anxiously awaiting the court’s response, aware of the potential impact on altcoin values and the broader crypto industry.
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