In the Celsius Network bankruptcy case, Judge Martin Glenn has rejected efforts to establish a special shareholder class, as well as a decision on whether Celsius Network Tokens should be classified as securities. The court documents, filed on August 25, revealed that the US Bankruptcy Court for the Southern District of New York dismissed these motions.
Initiated by investor Otis Davis through a motion filed on July 25 and heard on August 14, the request sought the creation of a distinct legal class for investors, separate from Celsius Network employees and customers. Davis also sought sanctions against the leg al team representing the Unsecured Creditors Committee (UCC), accusing them of not providing required information.
Additionally, the filing aimed to categorize CEL tokens as "not a security" based on the SEC v. Ripple case. This approach drew upon the ruling by Judge Analisa Torres in the Ripple case, which determined that XRP is not a security when programmatically sold by digital asset exchanges. However, Torres also indicated that XRP could be considered a security when sold to institutional investors.
Judge Glenn responded swiftly, dismissing all three motions a mere 11 days after their discussion in the August 14 hearing. He ruled against the requests and emphasized that his decision does not constitute a definitive finding under federal securities law s regarding cryptographic tokens and their transactions. noted that both the SEC and the Commission retain the right to challenge any trading activity involving encrypted tokens.
Celsius Network experienced bankruptcy on July 14, 2022, followed by the arrest of its former CEO, Alex Mashinsky, on fraud charges just a year later. The company has engaged in settlements aimed at offering relief to client and investor groups, with the latest round of settlements set for a hearing in October.
