Judge denies stakeholders’ request for representation in Celsius bankruptcy case

Judge Martin Glenn denied the request for a special shareholders class in the Celsius Network bankruptcy case. The judge also declined to determine whether the CEL token is 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, an investor named Otis Davis requested the creation of a legal class for investors separate from employees and customers of Celsius Network.

Davis also requested that the court sanction the legal team representing the Unsecured Creditors Committee (UCC) for not disclosing required information.

The filing also asked the court to declare CEL “not a security” based on the recent ruling in the SEC v. Ripple case, where XRP was determined not to be a security.

In the XRP case, XRP was ruled not to be a security for programmatic sales on digital asset exchanges, but was considered a security when sold to institutional investors.

Judge Glenn quickly responded to the motions in the Celsius bankruptcy case, denying all three requests just 11 days after the Aug. 14 hearing.

Glenn emphasized that his order and the motions do not constitute a finding on whether crypto tokens or transactions involving crypto tokens are securities, and that the SEC and the Committee still have the right to challenge such transactions.

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 has reached settlements to provide relief to customers and investor groups, with the latest round of settlements scheduled for a hearing in October.