Celsius Network Emerges from Bankruptcy
Celsius, a crypto lending company, has received approval from a New York judge to exit bankruptcy using a plan that involves the use of a mining firm to pay back creditors. The plan was confirmed under section 1129 of the Bankruptcy Code by Judge Martin Glenn in an order issued on Thursday.
Creditors voted in favor of a plan that will distribute approximately $2 billion worth of bitcoin and ether to them. A new company, managed by the Fahrenheit Group, will take over Celsius’ assets and build out its mining and staking operations.
Legal Troubles
Celsius had filed for bankruptcy and owed billions to investors. The SEC sued Celsius and its former CEO Alex Mashinsky for allegedly raising billions through fraudulent sales of “crypto asset securities” and manipulating the price of CEL, the company’s native token. Mashinsky’s criminal trial is set for September 17, 2024.
SEC Clearance
Bloomberg reported that the new company would need approval from the Securities and Exchange Commission, with the possibility of Celsius facing liquidation if mining plans fail. Judge Glenn also expressed hope for a swift decision from the SEC regarding Celsius’ plan.
“Notwithstanding anything to the contrary in this Confirmation Order… nothing in this Confirmation Order… constitutes a finding under the federal securities laws as to whether crypto tokens or transactions involving crypto tokens are securities,” said Glenn.
Hot Take: Road to Recovery
Celsius Network’s approval to exit bankruptcy is a significant step towards repaying its creditors and rebuilding its operations. The involvement of a mining firm and the oversight by the Fahrenheit Group provides hope for a successful turnaround. However, legal challenges from the SEC still loom over the company’s future, adding uncertainty to its recovery journey.
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