HomeNewsRipple Case Impacts CEL Token's Status in Bankruptcy Debacle

Ripple Case Impacts CEL Token’s Status in Bankruptcy Debacle

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  • US Bankruptcy Judge sidesteps CEL token’s security classification, referencing the Ripple-SEC case.
  • Investigations suggest Celsius manipulated CEL token price, benefiting company executives.

Ripple’s Shadow on CEL Token’s Legal Drama

In a decisive move echoing the financial sector’s reverberations, Chief US Bankruptcy Judge Martin Glenn eschewed determining whether CEL, Celsius’s native token, qualifies as a security. A key backdrop to this is Ripple Labs’ enduring legal feud with the US Securities and Exchange Commission (SEC).

CEL in Legal Quagmire: Ripple’s Influence

Otis Davis, a prominent CEL token holder, had made a clarion call to the judiciary. He urged the court to glean insights from the Ripple/XRP legal precedent, aiming to carve a distinct committee for CEL’s stakeholders. However, the Judge’s Friday verdict left Davis, among others, disappointed.

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The judgment resonated with caution. Judge Glenn highlighted that his decision should not be misconstrued as the court’s final stance on whether digital tokens or associated transactions fit the securities bill as per federal laws. This leaves ample room for entities like the SEC and other committees to contest transactions tethered to crypto tokens. To crystallize his standpoint, the judge noted,

“Nothing… constitutes a finding… as to whether crypto tokens or transactions involving crypto tokens are securities.”

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This evasion traces back to 2020, when the SEC locked horns with Ripple, accusing them of unlawfully amassing $1.3 billion via XRP sales, labelling it an unregistered security. However, last month, the legal winds shifted in Ripple’s favor. Judge Analisa Torres decreed that XRP’s exchange-based sales didn’t mirror investment contracts. Yet, the sale of XRP to institutional powerhouses mirrored securities, granting the SEC a sliver of victory. This pivotal ruling has now become a cornerstone in related court matters.

Celsius Under the Lens: Allegations of Token Manipulation

Adding fuel to the fire is Shoba Pillay’s investigation. Appointed by the court, Pillay scrutinized Celsius’ stewardship of CEL tokens and their promotional tactics. Her findings painted a contrasting picture from Celsius’s customer assurances. The crypto lender, she asserts, has been financially underwater since its inception.

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The plot thickens with allegations of Celsius using CEL as a tool to fatten executive pockets. Records indicate Celsius funneled over $558 million into buying CEL tokens in open markets. The aftermath? A staggering 14,000% price leap since mid-2020. This windfall seemingly benefited the top brass, including CEO Alex Mashinsky and co-founder Daniel Leon, who offloaded CEL tokens reaping millions. A telling indication is the company’s alleged move to safeguard CEL from price plunges triggered by Mashinsky’s hefty personal CEL sales.

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Brian Johnson
Brian Johnson
A dedicated Bitcoin journalist passionate about uncovering the latest trends, developments, and innovations in the world of cryptocurrency, while delivering engaging and well-researched articles to inform and educate readers on the dynamic digital finance landscape.
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