Celsius Token Holders' Valuation Increase Effort Falls Short

Aug 25, 2023 at 02:31 pm

Creditors of the bankrupt cryptocurrency lender recently made an effort to argue that the valuation of CEL tokens should stand at $0.80, the price at which these tokens were trading on the day the company filed for bankruptcy in July 2022. However, a judgment from the New York bankruptcy court on Thursday revealed that this bid had not succeeded. Instead, if creditors give their approval, a revised wind-up plan will proceed with a lower valuation of $0.25.

The argument put forth by Celsius, the crypto lender, was that the trading prices didn't accurately represent the actual situation due to alleged manipulation in the CEL market. The company further contended that the court could have even considered a valuation lower than $0.25 or even down to zero, in alignment with what stockholders might expect during a bankruptcy process.

Two CEL token holders, Santos Caceres and Otis Davis, had pushed to participate in the bankruptcy negotiations through a special committee of CEL holders. However, this request was denied by Judge Martin Glenn.

Importantly, Judge Glenn's statement aimed to sidestep entangling the court in the ongoing regulatory debate with the Securities and Exchange Commission (SEC) regarding the classification of CEL and other cryptoassets under federal securities laws.

As part of the company's effort to resolve its affairs and facilitate a sale to the crypto consortium Fahrenheit while returning funds to creditors, Celsius' management proposed valuing CEL at $0.25. This valuation, a step up from the prior figure of $0.20, was detailed in a disclosure statement associated with the sale to Fahrenheit, which received approval from Glenn just last week.

Earlier in January, Shoba Pillay, an independent examiner appointed by Glenn, revealed that the CEL market was largely influenced by the company itself, benefiting insiders such as the former Chief Executive Officer, Alex Mashinsky. Notably, Mashinsky has been arrested on charges of market manipulation, among others, and he has entered a plea of not guilty.

Creditors now have a month to review and vote on the proposed sale plan.

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