The counsel for bankrupt crypto lender Celsius told a New York Court on Tuesday that a landmark decision about whether the Ripple linked XRP token was a security would not impact the plans to wind up the bankrupt crypto lending firm Celsius.

Judge Martin Glenn has been paying attention to the bankruptcy proceedings of Celsius, where a court recently ruled that XRP was a security for institutional buyers such as hedge funds.

The new company that will take over Celsius has “not engaged in any securities offering and has not engaged any of Celsius’ historical business practices,” said Chris Koeing, a lawyer from Kirkland and Ellis who represented Celsius.

Koenig stated that the Fahrenheit Consortium will focus on issues less controversial from a legal standpoint, such as bitcoin mining and Ethereum stake.

XRP’s ruling could affect creditor repayments if they hold Celsius’ CEL token. This is because U.S. bankruptcy laws require a mandatory downgrade of customer claims relating securities. Koenig stated that the estate had previously valued the token at $0.20. However, it could fall to zero. Some creditors have also argued for a value of $0.81. This is the apparent price when the estate filed for bankruptcy in July 2022.

“Terminated in short order”

The Department of Justice and securities, commodities, and trade regulators charged Alex Mashinsky and Roni Cohen Pavon with multiple fraud charges last week. Mashinsky has pleaded not-guilty, and his attorneys have described the allegations as “baseless.”

Koenig stated that as soon as the board of Celsius learned of Cohen-Pavon’s indictment, it immediately convened a special committee to approve his dismissal.

Koenig stated that “he is expected to be fired in short order”, once the hearing, required by Israeli law, occurs. Even before this process began, Cohen-Pavon had little authority over the day-today operations of the debtors.

Parallel to Mashinsky’s arrest, regulators announced several deals with Celsius to avoid any negative impact on creditor payments. Koenig stated that the Securities and Exchange Commission’s assertion that CEL and Celsius Earn Interest Account is a security would be supported by the stipulation entered into between the company and the SEC.

Read more: Celsius moves $59M in Altcoins as a possible prelude to converting into BTC or ETH

Aoyon A. Ashraf is the editor.