Court Approves Celsius Network’s Bankruptcy Exit, Transition to Bitcoin Miner

Crypto lending platform Celsius Network has secured approval for its restructuring plan from a U.S. bankruptcy court. The plan involves the return of cryptocurrency to customers and the establishment of a new company, which will be owned by Celsius creditors.

This court approval marks a significant milestone for the company, enabling it to initiate compensation to creditors through a combination of digital assets and shares in a new publicly traded Bitcoin mining operation. The distribution of assets is expected to commence in early 2023, providing relief to customers whose accounts have been frozen for more than a year.

Judge Martin Glenn confirmed the restructuring plan, giving the green light for the commencement of asset distribution early next year. The reorganized business will be overseen by Fahrenheit LLC, a consortium led by hedge fund Arrington Capital. The new entity will focus on Bitcoin mining and earning staking fees by validating blockchain transactions.

Celsius Network indicated that it might utilize its mining equipment to repay customers. Celsius Mining LLC, the mining arm of the platform, owned a total of 80,850 mining rigs, with 43,632 reported to be currently in operation.

The restructuring plan represents a pivotal moment for Celsius Network, offering a path forward for the company and a resolution for its customers who have experienced frozen accounts during the restructuring process.

Celsius Network Moves Closer to Chapter 11 Exit with Court and Creditor Approval of Restructuring Plan

Celsius Network, the New Jersey-based crypto lending platform, has achieved a crucial step in its path to recovery by obtaining court approval for its restructuring plan. The company filed for Chapter 11 protection in July 2022 after freezing customer accounts, marking one of the largest crypto collapses of the year, with assets valued at $3 billion.

The restructuring plan, designed to address $1.2 billion in deficits against $4.3 billion in assets and $5.5 billion in liabilities, aims to see Celsius emerge from Chapter 11 in early 2024. The liabilities primarily consist of $4.72 billion in user deposits.

Arrington Capital founder Michael Arrington highlighted the uniqueness of Celsius’s revival, distinguishing it from other crypto companies that faced collapse in 2022 and were unable to reorganize.

Celsius Network explored various reorganization plans, with the court granting permission to poll account holders on the proposal to restart as a “new user-owned company.” Users unwilling to participate have the option to opt out.

The restructuring plan received an impressive 95% approval from the voted creditors, marking a significant milestone. The plan is now pending approval from the Securities and Exchange Commission (SEC). In the event of a collapse in the mining operation proposal, Celsius may consider eventual liquidation.

Celsius Network’s Restructuring Plan Advances with Approval, Fahrenheit to Acquire Minority Stake

Celsius Network’s restructuring plan, following its Chapter 11 filing, unveils significant components, including a minority stake sale to Fahrenheit for $50 million, a Nasdaq listing for the reorganized Celsius, and a $2 billion partial repayment to customers in cryptocurrency assets.

As part of the bankruptcy recovery, Fahrenheit, led by a consortium that includes Arrington Capital, will acquire a minority stake in the reorganized Celsius for $50 million. The new company’s stock is set to be publicly listed on Nasdaq, providing Celsius customers with the opportunity to sell equity shares obtained through the recovery process.

Celsius customers will also benefit from a partial repayment of around $2 billion in cryptocurrency assets deposited on the platform.

The restructuring plan involves a settlement valuing Celsius’s proprietary crypto token, CEL, at 25 cents. A court-appointed examiner had previously reported that Celsius inflated the value of its token in a manner described as “very Ponzi-like,” benefiting insiders. The settlement aims to address these concerns.

In a significant development, the reorganized Celsius plans to pursue litigation against its founder, Alex Mashinsky, who faces criminal charges in the U.S. and a civil lawsuit in New York. The charges allege that Mashinsky misled customers and inflated the value of CEL. Mashinsky has pleaded not guilty to the charges.

The unfolding restructuring plan reflects Celsius Network’s commitment to addressing past issues, compensating customers, and moving forward with a more transparent and accountable business model.