Celsius Starts Paying Creditors $3 Billion After Bankruptcy
Bankrupt crypto lender Celsius has announced that it has begun distributing up to $3 billion in cryptocurrency and other assets to its creditors. This payment plan is part of the company’s efforts to reorganize and recover from its financial failure.
The distribution includes more than $3 billion worth of assets, and it also involves the creation of a new bitcoin mining company called Ionic Digital, Inc. This mining operation will be managed by Hut 8 Corp on behalf of Celsius’ creditors.
“Today, under the MiningCo Transaction, the company has commenced distributions of over $3 billion of liquid cryptocurrency and fiat to creditors. Ionic Digital was created as a new Bitcoin mining company that will continue to deliver recoveries to creditors.”
Celsius’ announcement
Celsius’ Bankruptcy and Reorganization Plan
In June 2022, Celsius faced a collapse in the crypto market and a mass exodus of depositors, leading to the suspension of fund withdrawals from client wallets. Subsequently, the company filed for bankruptcy in July with an estimated balance sheet deficit of $1.2 billion and liabilities amounting to $4.7 billion.
In late 2023, the Bankruptcy Court in New York approved Celsius Network’s reorganization plan. The plan involves establishing a new company solely focused on cryptocurrency mining and staking to repay Celsius’ debts. This new entity will not accept deposits or issue loans in cryptocurrency like Celsius did, and its operations will be overseen by Celsius’ creditors.
Hot Take: Celsius Takes Steps Towards Recovery
Celsius is taking significant strides towards recovery by initiating payments to its creditors and outlining a reorganization plan that involves creating a new mining company. This development signals the company’s commitment to addressing its financial challenges and fulfilling its obligations to creditors.
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