Is the CEL token from Celsius embroiled in a similar legal predicament as Ripple’s XRP? A recent court document reveals that a bankruptcy judge decided not to define the CEL token as a security, despite the ongoing case involving Ripple Labs.
The Case at Hand
Investor Otis Davis requested that the U.S. Bankruptcy Court for the Southern District of New York acknowledge the legal precedent established in the Ripple/XRP case. His intention was to form a new committee exclusively for CEL token holders. However, Chief U.S. Bankruptcy Judge Martin Glenn dismissed this motion, along with others, in Celsius’s ongoing bankruptcy proceedings.
Glenn clarified, “… nothing in the Motions, this Order, or announced at the Hearing constitutes a finding under the federal securities laws as to whether crypto tokens or transactions involving crypto tokens are securities, and the right of the United States Securities and Exchange Commission and the Committee to challenge transactions involving crypto tokens on any basis is expressly reserved.”
Legal Battles and Ripple
The SEC has been locked in a legal battle with Ripple since 2020, accusing the company of raising $1.3 billion through the sale of XRP, deemed an unregistered security. Judge Analisa Torres of the U.S. District Court for the Southern District of New York ruled that some of Ripple’s sales of XRP did not violate securities laws due to a blind bid process, a ruling hailed as a victory by the crypto industry. However, she determined that other direct sales of the token to institutional investors were indeed securities, providing a partial win for the SEC.
CEL Controversy
Earlier this year, a court-ordered bankruptcy report suggested that Celsius employed a strategy to sell CEL tokens privately and make offsetting purchases in the public market, which could potentially influence the token’s trading price. The report’s examiner also accused former Celsius CEO Alex Mashinsky of selling CEL tokens while publicly claiming he was buying more or maintaining his holdings.
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