Celsius Network’s Bankruptcy Exit Plan Approved by Judge
Celsius Network, the crypto lending company that collapsed last summer, is on track to exit bankruptcy after a judge approved its customer repayment plan in a Delaware bankruptcy court. The plan, which was presented on Oct. 2, involves establishing a new entity called NewCo with $450 million in seed funding. This new entity will focus on Bitcoin mining and staking and will be owned by Celsius’ once-spurned customers and creditors.
Under the management of former CEO and co-founder Alex Mashinsky, Celsius will be managed by the Fahrenheit Group, which won its bid to acquire Celsius in May. NewCo plans to become a publicly traded company listed on the Nasdaq to maximize liquidity for creditors.
The approved plan also includes a distribution of “at least $2.03 billion” in cryptocurrency for creditors. After losing control of their accounts and crypto for more than a year, Celsius lawyers have signaled customers could see repayments early next year.
In July, Mashinsky was hit with criminal charges and civil lawsuits for his conduct at the helm of Celsius. The Department of Justice, Securities and Exchange Commission (SEC), Commodities Futures Trading Commission, and Federal Trade Commission all took action against him.
Before the plan was approved, CEL spiked to $0.25 on Wednesday but has since fallen to $0.23, a decrease of 7% over the past day according to CoinGecko.
U.S. Bankruptcy Judge Martin Glenn approved the plan without determining whether digital assets belonging to Celsius’ creditors are securities or commodities. However, he signaled that the SEC could challenge transactions involving crypto tokens.
Hot Take: What’s Next for Celsius Network?
Celsius Network’s approval of its customer repayment plan is a significant step toward its exit from bankruptcy and potential recovery for creditors. With plans to establish a new entity focused on Bitcoin mining and staking, as well as becoming a publicly traded company listed on the Nasdaq, there is hope for maximizing liquidity for those owed funds. However, legal challenges from regulatory bodies such as the SEC still loom over the future transactions involving crypto tokens.
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