Judge Denies Special Shareholders Class and CEL Token Security Determination in Celsius Network Bankruptcy Case
Summary:
Judge rejects special shareholders class and declines to address whether CEL token is a security in Celsius Network bankruptcy case. Motion filed by investor to create legal class and sanction Unsecured Creditors Committee. Judge's ruling does not determine if crypto tokens are securities. Celsius Network bankruptcy occurred in 2022, former CEO charged with fraud. Settlements reached with customers and investors.
Judge Martin Glenn rejected the request for a special shareholders class in the Celsius Network bankruptcy case in a court filing made on August 25. The judge also chose not to address the issue of whether the CEL token qualified as a security. A motion was filed by investor Otis Davis on July 25 and heard by the United States Bankruptcy Court Southern District New York on August 14, seeking the creation of a separate legal class for investors and sanctions against the Unsecured Creditors Committee (UCC) for alleged failure to disclose necessary information. Davis also urged the court to declare CEL as "not a security" based on the recent SEC vs Ripple case where XRP was deemed not a security. It is important to note that Judge Torres ruled that Ripple was not a security for programmatic sales on digital asset exchanges in the XRP case. However, she also stated that Ripple was considered a security when sold to institutional investors. In the Celsius bankruptcy case, Judge Glenn promptly denied all three motions in question just eleven days after the August 14 hearing. Additionally, he made it clear that his ruling did not constitute a finding under federal securities laws regarding crypto tokens. The right of the SEC and the Committee to challenge transactions involving crypto tokens on any grounds was expressly reserved. Previously, as reported by Cointelegraph, the Celsius Network filed for bankruptcy on July 14, 2022, and a year later, the former CEO Alex Mashinsky was arrested and charged with fraud. Since then, Celsius Network has entered into various settlements to provide relief to customers and investor groups, with the upcoming round scheduled for a hearing in October.
Published At
8/25/2023 5:45:00 PM
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