US Bankruptcy Court Approves Celsius Restructuring Plan
Celsius Network, a failed cryptocurrency lender, has received approval from a US bankruptcy court for its proposed restructuring plan. The plan will allow Celsius to return cryptocurrency to its customers and create a new company owned by its creditors.
According to reports by Bloomberg, Celsius will repay its customers through a combination of cryptoassets and stock in the new publicly listed Bitcoin mining company. Lawyers for the crypto lender said Celsius could start distributing assets in early 2024.
Crypto Consortium Fahrenheit Takes Charge of Reorganized Business
In September, Celsius’ creditors voted in favour of its reorganization plan. Cryptocurrency consortium Fahrenheit LLC, which includes hedge fund Arrington Capital, will manage the restructured business. Customers will receive around $2 billion in ether (ETH), bitcoin (BTC), and equity in NewCo.
The Fahrenheit consortium won the bid to acquire Celsius and its assets. They acquired Celsius’ staked crypto, institutional loan portfolio, mining unit, and additional alternative investments. The consortium is backed by Arrington Capital, US Bitcoin Corp, Steven Kokinos, Ravi Kaza, and Proof Group.
SEC Approval Pending for Celsius Bankruptcy Plan
Celsius’ proposed plan to repay its creditors has not been met with enthusiasm across the board. The Securities and Exchange Commission (SEC) must still approve the plan. Judge Martin Glenn called on the agency to quickly decide whether to approve the plan so the company could exit Chapter 11 bankruptcy proceedings. The SEC filed a lawsuit against the company and its CEO, Alex Mashinsky.
In its lawsuit, the SEC accused Mashinsky and several other Celsius executives of raising billions through fraudulent and unregistered offers and selling “crypto asset securities” without the necessary approval and licensing. The securities agency further alleged that Celsius and Mashinsky repeatedly lied to investors about the company’s financial position and manipulated the price of the company’s native token, CEL.
Hot Take: Celsius Network’s Restructuring Plan Faces Hurdles with SEC
Celsius Network’s restructuring plan has been approved by a US bankruptcy court, but it still faces hurdles with the Securities and Exchange Commission (SEC). The SEC must approve the plan before it can move forward, as they have filed a lawsuit against Celsius and its CEO for alleged fraudulent activities. This puts into question the future of Celsius’ reorganization as it navigates through legal challenges.
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