Judge denies stakeholders’ request for representation in Celsius bankruptcy case

Judge Martin Glenn shot down efforts to have a special shareholders class declared in the Celsius Network bankruptcy case in a court document filed on Aug. 25. The judge also declined to settle whether or not the Celsius (CEL) token was a security. 

In a motion filed on July 25 and heard before the United States Bankruptcy Court for the Southern District of New York on Aug. 14, investor Otis Davis asked the court to create a legal class for investors to be considered separate from Celsius Network employees and customers.

Davis also requested that the court sanction the legal team representing the Unsecured Creditors Committee (UCC) over the alleged failure to disclose required information.

The filing further asked the court to declare CEL “not a security” in light of the recent findings in the U.S. Securities and Exchange Commission (SEC) v. Ripple case, where, according to Davis, Judge Analisa Torres determined that XRP (XRP) was not a security.

Related: Breaking: Judge rules XRP is not a security in SEC’s case against Ripple

It’s worth mentioning that, in the XRP case, Torres ruled that XRP was not a security in regard to programmatic sales on digital asset exchanges. In the same ruling, however, Torres said that XRP was a security when sold to institutional investors.

In the Celsius bankruptcy case, Glenn’s response was relatively swift, denying all three motions set forth just 11 days after the motion was argued in an Aug. 14 hearing.

Glenn shot down all of the motion’s requests and further added:

“[N]othing 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.”

As Cointelegraph reported, the Celsius Network bankruptcy occurred on July 14, 2022. Just a year later, the company’s former CEO, Alex Mashinsky, was arrested and charged with fraud.

In the time since, Celsius has agreed to numerous settlements meant to provide relief to customers and investor groups, with the latest round set for a hearing in October.

Yesterday, the Court approved the Disclosure Statement, allowing us to begin the process of soliciting votes on the Plan. You can read our official announcement here: https://t.co/8Kzq2HfH04

— Celsius (@CelsiusNetwork) August 18, 2023