CEL Token Classification Remains Unresolved
In the midst of the ongoing controversy surrounding Ripple Labs and its XRP token, another blockchain project, Celsius, finds itself in the limelight. A recent court filing reveals that Chief U.S. Bankruptcy Judge Martin Glenn chose not to clarify if the CEL token, native to Celsius, is considered a security.
The decision came after investor Otis Davis motioned for the U.S. Bankruptcy Court for the Southern District of New York to acknowledge the recent legal outcomes in the Ripple/XRP case. Davis’ intention was to establish a distinct committee solely for CEL token holders.
Judge Martin Glenn’s Decision
Although Celsius initiated bankruptcy procedures the previous year, Judge Glenn refrained from making direct remarks on Friday concerning the CEL token’s classification. The Judge stated:
“Nothing in the Motions, this Order, or announced at the Hearing amounts to a determination under federal securities laws regarding whether crypto tokens or transactions involving them are securities. The right for the U.S. Securities and Exchange Commission and the Committee to contest crypto token transactions remains intact.”
Ripple Case Background
The SEC has been at loggerheads with Ripple since 2020, alleging that the latter unlawfully garnered $1.3 billion in the same year by selling XRP, which the SEC deems an unregulated security.
However, a recent ruling by Judge Analisa Torres highlighted that certain XRP sales, due to a specific process, were not in violation of securities regulations. This brought about a mixed verdict, leaving both Ripple and the SEC with partial victories.
Following this, several other legal proceedings have referred to the Ripple case, including a notable one involving Terraform Labs.
Celsius Faces Its Share of Controversies
Earlier this annum, a court-ordered examination into Celsius revealed questionable trading strategies. Reports suggest that Celsius engaged in private CEL token sales while concurrently making corresponding public market purchases. This approach was speculated to influence the CEL token’s market price.
Furthermore, allegations surfaced against former Celsius CEO, Alex Mashinsky, accusing him of disposing of CEL tokens while publicly professing to be accumulating or maintaining his holdings.
Otis Davis’ Pleas
On August 14, following a motion filed on July 25, Otis Davis approached the court with a unique request. Davis urged the establishment of a distinct legal category that differentiates investors from Celsius Network staff and clientele.
Moreover, Davis expressed grievances against the legal representatives of the Unsecured Creditors Committee (UCC), asserting their negligence in disclosing obligatory details.
He also appealed for the court to recognize CEL as “not a security,” referencing Judge Torres’ decision in the Ripple case, wherein she deemed XRP not a security.
Despite these extensive pleadings, the court remains reticent on providing a conclusive verdict on the CEL token’s classification.
