The Approval of Celsius Network’s Restructuring Plan
After more than a year of filing for Chapter 11 bankruptcy and freezing customer funds, Celsius Network has received approval from the New York bankruptcy court to move forward with its restructuring and repayment plan. This comes after an order from Judge Martin Glenn of the US Bankruptcy Court Southern District of New York.
The court’s approval is a significant milestone for Celsius, which faced a liquidity crisis and collapsed in 2022. The restructuring plan involves transitioning into a new bitcoin mining entity owned by creditors called NewCo, along with redistributing $2 billion worth of BTC and ETH to customers, as well as shares in the newly established company. A consortium comprising companies like Coinbase, called Fahrenheit LLC, will manage NewCo.
Celsius’ Plan Still Pending SEC Approval
Despite the court’s approval, the new bitcoin mining firm, NewCo, still requires approval from the US Securities and Exchange Commission (SEC). Judge Glenn previously urged the SEC to make a decision on whether to give the green light to Celsius’ plan. If the bitcoin mining plan fails to gain approval, Celsius may have to consider liquidation as an alternative.
Alex Mashinsky’s Trial in 2024
With Celsius cleared to exit bankruptcy, its former CEO, Alex Mashinsky, is set to stand trial in September 2024. Mashinsky faces allegations of defrauding Celsius customers and manipulating the value of the platform’s native coin, CEL. He was arrested in July 2023 but was later released on a $40 million bond. Mashinsky has denied these allegations and pleaded not guilty.
Roni Cohen-Pavon, another former Celsius executive, pleaded guilty to criminal charges against him and is cooperating with investigators. Additionally, Celsius reached a settlement with the FTC to pay a $4.7 billion fine and is banned from handling customer funds.
Hot Take: The Path Forward for Celsius Network
Celsius Network has overcome a major hurdle by receiving approval for its restructuring plan, paving the way for its exit from bankruptcy. However, uncertainties remain as it awaits SEC approval for its new bitcoin mining firm. Meanwhile, legal challenges involving its former CEO continue to loom over the company’s future.
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