Celsius’ counsel Chris Koenig told a New York court on Tuesday that the recent landmark judgment about whether the Ripple-linked XRP token is a security is unlikely to impact plans for the wind-up of the bankrupt crypto lender. “We don’t think it [the Ripple judgment] has any effect outside of potentially the CEL token issue,” Koenig said.
The Fahrenheit consortium, which won a recent bid for Celsius’ assets, will focus on less legally contentious issues like Bitcoin mining and Ethereum staking, Koenig said. The XRP ruling could affect creditor repayments for holdings of Celsius’ token CEL, given U.S. bankruptcy rules which apply a mandatory downgrade to customer claims relating to securities. The estate has previously judged the token’s worth at $0.20, but it could also fall to zero, Koenig said.
Last week, Celsius’ founder and former CEO Alex Mashinsky, alongside Chief Revenue Officer Roni Cohen-Pavon, were charged on multiple fraud counts by the Department of Justice, as well as by securities, commodities, and trade regulators. On learning of the indictment of Cohen-Pavon, an Israeli citizen, last week, a special committee of Celsius’ board immediately met to authorize him to be fired, Koenig said.
In parallel to Mashinsky’s arrest, regulators announced a number of deals with Celsius in a bid to avoid any impact on creditor distributions. The stipulation the company entered into with the Securities and Exchange Commission would back up the regulator’s claim that CEL and Celsius’ Earn Interest Account are securities, Koenig said.