Celsius Restructuring Plan Approved by Bankruptcy Court
The Southern District of New York Bankruptcy Court has given the green light to Celsius’ proposed restructuring and customer repayment plan, following its submission a month earlier. The plan is designed to partially repay Celsius’ creditors in cryptocurrency, including $2 billion worth of Bitcoin and Ethereum, as well as shares in NewCo, a new crypto mining company funded by Celsius and owned by creditors.
NewCo’s Operations and Agreement with Fahrenheit
Fahrenheit, an investment group led by TechCrunch founder Michael Arrington, is currently running NewCo’s mining and staking operations after reaching an agreement with Celsius Network in May 2023. Despite court approval, the plan must still be accepted by the U.S. Securities and Exchange Commission (SEC), with Judge Martin Glenn urging the agency to make a decision. If approved, repayment distribution will begin next year; otherwise, liquidation may be considered.
Challenges Faced by Celsius
Celsius faced liquidity issues following the collapse of the algorithm stablecoin LUNA/TerraUST. The company paused withdrawals in June and filed for bankruptcy under Chapter 11 a month later. It held over $218 million worth of altcoins and repaid over $800 million to three creditors.
BlockFi’s Exit from Bankruptcy
Another entity affected by the LUNA crash is BlockFi, which announced its withdrawal and debt repayment portal after exiting bankruptcy. Users can submit withdrawal requests through the app, with initial distribution expected in early 2024.
Recovery of Failed Companies
Several companies that declared insolvency last year are showing signs of recovery. Bankrupt crypto exchange FTX is planning to rebrand to FTX 2.0 and is reportedly in talks with investors to reboot the exchange. The SEC is considering its relaunch under strict compliance.
The Crypto Market Outlook
The recent crypto winter seems to be ending, with higher prices ahead for major tokens such as Bitcoin and Ethereum. The market is showing signs of recovery, but it remains to be seen how this rally will progress.
Hot Take: Crypto Market Recovery Continues
Celsius Network has successfully exited bankruptcy after receiving approval from the Southern District of New York Bankruptcy Court for its restructuring plan. This development reflects positive signs for the overall recovery of the crypto market.
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