Celsius Network’s Shift to Bitcoin Mining Might Require Fresh Vote from Creditors, Says Judge
A U.S. bankruptcy judge has suggested that Celsius Network, a cryptocurrency lending platform, may need to secure a new vote from creditors for its planned transition to a Bitcoin mining venture. The judge expressed displeasure with the abrupt change and emphasized the importance of reaching an agreement with the U.S. Securities and Exchange Commission (SEC).
SEC Skepticism Leads to Revised Plan
Celsius recently announced a scaled-back post-bankruptcy strategy, focusing solely on Bitcoin mining due to the SEC’s skepticism about its original business plans. The company stated that while the SEC didn’t object to their bankruptcy plan, it was reluctant to endorse crypto lending and staking.
Attorney Contends No New Vote Needed
Celsius’ attorney argued that the court-approved bankruptcy plan allowed the company to shift to a mining-exclusive business without requiring a new vote from creditors. However, two customers expressed dissent in court documents, suggesting complete liquidation instead.
Improved Recovery for Creditors
The updated Celsius plan is expected to release $225 million in cryptocurrency assets to creditors, providing them with a projected 67% recovery. This surpasses the previous arrangement and will involve U.S. Bitcoin Corp overseeing the post-bankruptcy Bitcoin mining venture.
Hot Take: Celsius Faces Challenges in Transitioning to Bitcoin Mining
Celsius Network’s planned shift to a Bitcoin mining venture may encounter obstacles as suggested by a U.S. bankruptcy judge. The company’s revised strategy reflects SEC skepticism about its original business plans. While Celsius argues that a new vote from creditors isn’t necessary, dissenting customers have expressed their preference for complete liquidation. Despite these challenges, the updated Celsius plan aims to provide improved recovery for creditors, releasing $225 million in cryptocurrency assets and projecting a 67% recovery rate. The transition to a mining-exclusive business will be overseen by U.S. Bitcoin Corp.
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