Breaking: Judge Denies Separate Class for Celsius Stakeholders
Judge Martin Glenn has denied the request for establishing a separate class of stakeholders in the Celsius Network bankruptcy saga. This decision, revealed in a document filed on August 25, also sidestepped the crucial question of whether the CEL token qualifies as a security.
Push for Distinct Representation
In July, Otis Davis, an investor, approached the United States Bankruptcy Court, Southern District of New York, advocating for a distinctive legal class for Celsius Network’s investors. This move aimed to differentiate them from the company’s employees and customer base.
📢 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, 2023
Davis’ plea further emphasized the need for the court to label CEL “not a security.” He drew parallels with the recent SEC vs. Ripple case, where, according to him, the XRP token was not deemed a security.
However, in a swift response, Judge Glenn refuted all these motions in a short span, just eleven days after the presentation of the argument on August 14.
Moreover, Judge Glenn emphasized that the current order does not represent any decision under the federal securities laws on crypto tokens or associated transactions being securities. Hence, he maintained a clear path for the U.S. Securities and Exchange Commission to challenge such crypto transactions on various grounds.
CEL’s Valuation Remains Contentious
Celsius’ management intends to value CEL at $0.25 in their proposed plan. This move is part of their strategy to expedite the sale to crypto consortium Fahrenheit, aiming to revert funds to their creditors. This valuation witnessed a slight increase from the previous rate of $0.20 and was recently endorsed by Glenn.
However, certain token holders believed that CEL should have retained its value at $0.80 when Celsius declared bankruptcy. But with allegations of market manipulation swirling around, the court indicated that even a zero valuation wasn’t off the table. The company’s counter-argument stated that trading prices were not an authentic reflection since the CEL market faced alleged manipulation.
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