In the Celsius Network bankruptcy case, the judge denies a distinct class of stakeholders and ignores CEL’s security standing.
In the Celsius Network bankruptcy saga, Judge Martin Glenn has denied the request to create a distinct class of stakeholders. This decision, disclosed in a document filed on August 25, also avoided the crucial question of whether the CEL token is a security.
Demand Unique Representation
In July, investor Otis Davis petitioned the United States Bankruptcy Court for the Southern District of New York for a unique legal classification for Celsius Network’s investors. This action was intended to distinguish them from the company’s employees and customers.
📢 In a setback for stakeholders, a judge has denied their request for representation in the Celsius bankruptcy case. Despite recent rulings in the SEC vs Ripple case, the judge also declined to declare CEL token as "not a security." #Celsius #Bankruptcy #SECvsRipple
— Block Savvy (@Block_Savvy) August 25, 2023Davis’s argument highlighted the court’s need to declare CEL “not a security.” He drew parallels to the recent SEC v. Ripple case, in which, according to him, the XRP token was not considered a security.
However, in a prompt response, Judge Glenn rejected these petitions within eleven days of the August 14 argument presentation.
In addition, Judge Glenn emphasized that the current order does not represent a decision under the federal securities statutes regarding the securities status of crypto tokens or associated transactions. Consequently, he preserved a clear path for the U.S. Securities and Exchange Commission to challenge such crypto transactions on various grounds.
The Evaluation of CEL Remains Controversial
Celsius’s management intends to value CEL at $0.25 in their proposal. They have taken this action as part of their strategy to expedite the transfer to the crypto consortium Fahrenheit and return funds to their creditors. This valuation increased slightly from its previous rate of $0.20, and Glenn has recently endorsed it.
Some token holders believed CEL should have maintained its $0.80 value when Celsius declared bankruptcy. However, with allegations of market manipulation, the court indicated that a zero valuation was not out of the question.
The company’s counterargument asserted that trading prices did not accurately reflect the market because the CEL market was allegedly manipulated.
