Creditors Approve Reimbursement Plan for Celsius
Creditors of crypto lender Celsius have voted in favor of a reimbursement plan, allowing them to recover their funds and equity through a newly formed company called “NewCo.” Over 95% of creditors voted in favor of the plan, according to bankruptcy firm Stretto. However, the plan still requires final approval from the United States Bankruptcy Court for the Southern District of New York, which will be determined at a confirmation hearing on October 2, 2023. The hearing will also decide the redistribution of approximately $2 billion worth of Celsius crypto assets to creditors.
NewCo Controlled by The Fahrenheit Group
The newly formed entity, NewCo, will be controlled by The Fahrenheit Group, a consortium of crypto-native individuals and organizations. Celsius entered into an agreement with The Fahrenheit Group to provide funding and operational expertise. The group has already taken possession of Celsius assets. NewCo plans to expand Celsius’ Bitcoin mining operations, Ethereum staking, monetization of liquid assets, and develop new business opportunities that comply with regulations.
Allegations Against Celsius and Former CEO
In addition to bankruptcy challenges, Celsius and its former CEO Alex Mashinsky have faced several allegations in 2023. The US Securities and Exchange Commission (SEC) filed a lawsuit accusing the company and Mashinsky of fraudulent acts and price manipulation of Celsius tokens (CEL). Other regulatory bodies such as the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC) also filed complaints against Celsius and Mashinsky for fraudulent schemes and violations of regulations.
Mashinsky Arrested Amid Investigation
In July 2023, Mashinsky was arrested in New York as part of an ongoing investigation into Celsius’ collapse. He and Celsius Chief of Revenue Officer Roni Cohen-Pavon were charged with misleading customers about the company’s value and interest in CEL. Mashinsky pleaded not guilty and was released on a $40 million bond, but his banking and real estate assets have been frozen by the court.
Hot Take: Creditors Vote in Favor of Reimbursement Plan for Celsius
Creditors of Celsius have approved a reimbursement plan that will allow them to recover their funds through a newly formed company. The plan, which received overwhelming support from creditors, is now awaiting final approval from the bankruptcy court. If approved, approximately $2 billion worth of Celsius assets will be distributed to creditors. Additionally, allegations against Celsius and its former CEO have added to the challenges faced by the crypto firm this year. Despite these difficulties, Celsius continues to navigate through its bankruptcy proceedings with the hope of resolving its financial obligations and moving forward.
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