In a recent decision, a bankruptcy judge in the United States chose to not classify the CEL token as a financial security. The move comes in light of a motion referencing the legal case between Ripple and the SEC.
Investor Otis Davis had asked the bankruptcy court for the Southern District of New York to “acknowledge the legal precedent set in the Ripple/XRP case”, with the aim of creating a new, separate committee for CEL token holders. The motion was defeated last Friday.
Judge dodges classification of CEL as a financial security
A US bankruptcy judge recently decided not to rule on the status of Celsius’ CEL token as a financial security. The decision follows a request from investor Otis Davis, who wanted the bankruptcy court for the Southern District of New York to recognize the precedent set by the case. Ripple/XRP.
Davis’ goal was to form a new independent committee for CEL token holders. Bankruptcy Court Chief Judge Martin Glenn denied that motion last Friday, noting that under federal securities laws, nothing in the motion determines the status of cryptocurrencies.
Recent price action of the CEL token
The price of the CEL token has experienced significant fluctuations lately. It currently sits at $0.128 and has recorded an increase of 4.87% in the last 24 hours and 8.7% over the past week. However, in the wake of the company’s bankruptcy, the CEL token saw its value collapse by 88.55% over the past yeartumbling from a high of around $8 in June 2021 to just $0.46 in November 2022 according to CoinMarketCap.
The impact of the Ripple case on cryptocurrency litigation
The case between the SEC and Ripple began in 2020, when the agency accused Ripple of raising $1.3 billion through the sale of its XRP token, considered by the SEC to be an unregistered security. Last month, Judge Analisa Torres ruled that some of Ripple’s sales did not violate the law on securitiesdue to a blind bidding process.
This decision was seen as a partial victory for the cryptocurrency industry. Since then, the Ripple case has been cited in other legal proceedingsincluding a separate case regarding Terraform Labs.
A report released earlier this year indicated that Celsius was selling its CEL tokens in private transactionswhile making equivalent purchases on the open market.
According to this report, the company believed that this strategy would influence the trading price of the token. The Examiner also accused former Celsius CEO Alex Mashinsky of sell CEL tokens while publicly declaring that they are buying more or holding them.
Source : The Block