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On Friday, Celsius was authorized to commence the liquidation of its altcoins, as the insolvent crypto lender makes arrangements to distribute assets to creditors exclusively in the two most commonly utilized cryptocurrencies, bitcoin (BTC) and ether (ETH).

Bankruptcy Judge Martin Glenn of the Southern District of New York has granted approval to Celsius's proposal after engaging in discussions with the Securities and Exchange Commission (SEC). The SEC has recently emphasized that certain lesser-known crypto tokens should be classified as securities, thereby necessitating regulatory authorization for their handling.

Celsius “may sell or convert any non-BTC and non-ETH cryptocurrency, crypto tokens, or other cryptocurrency assets other than such tokens that are associated with Withhold or Custody accounts … to BTC or ETH commencing on or after July 1, 2023,” Glenn’s ruling said.

The company has “been in regular dialogue with the Securities and Exchange Commission (the “SEC”) and certain state regulatory agencies regarding the proposed distribution of cryptocurrency under the Plan to ensure that all such distributions are in full compliance with applicable federal and state laws and regulations,” the filing added.

Celsius, which experienced a collapse in July 2022 and received approval in May for its sale to the crypto consortium Fahrenheit, is currently working on a revised bankruptcy plan. This new plan aims to exclude the distribution of cryptocurrencies to creditors, with the exception of Bitcoin (BTC) or Ethereum (ETH), unless under specific circumstances.

Recently, the Securities and Exchange Commission (SEC) has made significant moves to crack down on major cryptocurrency exchanges like Coinbase, Binance, and Bittrex. They have asserted that tokens associated with Polygon (MATIC), Near (NEAR), and Cardano (ADA) should be classified as securities and fall under the purview of regulatory measures.

Efforts to liquidate the bankrupt cryptocurrency lender Voyager were hindered by the Securities and Exchange Commission (SEC) asserting that its VGX token might be categorized as a security. This led to significant delays and eventually caused Binance.US, who had expressed interest in purchasing Voyager's assets, to withdraw their offer.