March 27, 2024
Judge Glenn has dismissed the proposal for a distinct class of shareholders in the bankruptcy case involving the Celsius Network
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Judge Glenn Rejects Special Shareholders Class in Celsius Network Bankruptcy Case

Judge Martin Glenn has rejected attempts to establish a special class of shareholders in the Celsius Network bankruptcy case, according to a court document filed on August 25. Additionally, the judge declined to make a determination on whether the CEL token qualifies as a security.

An investor named Otis Davis filed a motion on July 25, which was heard by the United States Bankruptcy Court, Southern District of New York, on August 14. Davis requested the court create a distinct legal class for investors, separate from Celsius Network’s employees and customers. Davis also sought sanctions against the legal team representing the Unsecured Creditors Committee (UCC), claiming they failed to disclose necessary information.

The filing also urged the court to declare that the CEL token should not be classified as a security, citing the recent SEC vs. Ripple case. In this regard, Davis noted that Judge Analisa Torres determined XRP was not a security. It’s important to note that Judge Torres ruled Ripple was not a security for programmatic sales on digital asset exchanges but considered it a security when sold to institutional investors.

Judge Glenn promptly responded to the motions in the Celsius bankruptcy case, denying all three requests a mere eleven days after the August 14 hearing. He further added: “Nothing in the motions, this order, or announced at the hearing constitutes a finding under the federal securities laws as to whether crypto tokens or transactions involving crypto tokens are securities, and the right of the United States Securities and Exchange Commission and the Committee to challenge transactions involving crypto tokens on any basis is expressly reserved.”

The Celsius Network’s bankruptcy incident occurred on July 14, 2022. In the span of just one year, the company’s former CEO, Alex Mashinsky, was arrested and charged with fraud. In the time since, Celsius Network has entered into multiple settlements aimed at offering relief to customers and investor groups. The latest round of settlements is scheduled for a hearing in October.

Image by Okan Caliskan from Pixabay

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