Celsius Networks, a former cryptocurrency lender, ended its bankruptcy case on Thursday, with a judge upholding its lender-owned bitcoin mining plan, more than a year after the company’s bankruptcy filing plunged into a volatile period for cryptocurrency companies.
Judge Martin Glenn on Thursday ruled in favor of Celsius’ plan to create a new company around the crypto-miner Celsius and pay off its creditors.
Celsius will partially repay customers whose accounts have been frozen since the company filed for bankruptcy in July 2022, in addition to paying customers in a combination of cryptocurrency and stock in the new company, according to the estimate.
The new company, Newco, will be funded by a $450 million investment in Celsius and $50 million in Fahrenheit by the investment group that bought the rights to manage Newco’s mining and stock operations earlier this year.
The plan still needs to be approved by the Securities and Exchange Commission, although Glenn has previously urged the agency to make a quick decision on the plan, Bloomberg reported.
A large number
$4.7 billion. That’s how much Celsius owes more than 100,000 creditors, according to the first bankruptcy filing.
An amazing fact
Alameda Research, a sister business to failed cryptocurrency exchange FTX, is listed as one of Celsius’ creditors with an unsubstantiated claim of $12.7 million. Sam Bankman-Fried, the founder of FTX and Alameda, was convicted earlier this month of multiple fraud and embezzlement charges stemming from the failure of FTX. He faces up to 110 years in prison.
Celsius filed for bankruptcy last year, after co-founder Alex Mashinsky argued that the cryptocurrency lender posed less risk to customers than traditional banks. Wall Street Journal. Celsius has made investments that would make it difficult for the company to survive if a large number of customers withdraw their funds. Journal He reported. Mashinsky was indicted in July on charges of securities fraud, commodity fraud and conspiracy to manipulate the price of the Celsius token CEL. Chris Ferraro, the company’s former CFO, was named interim CEO. That same day, the Federal Trade Commission reached a settlement with Celsius, permanently barring the company from holding consumer assets. According to the agency, Celsius convinced its customers to transfer cryptocurrencies to the platform by promising that their deposits would be safe and available. The Justice Department said Mashinsi “coordinated a scheme to defraud Celsius customers from 2018 to June 2022, a month before his arrest.”
Challenging times for the crypto market last year resulted in a record number of exits for crypto lenders, who then filed for bankruptcy. Voyager filed for Chapter 11 bankruptcy a week before Digital Celsius. Genesene Global filed for bankruptcy in September 2022, two months after the company stopped taking out cash. Both BlockFi and FTX filed for bankruptcy in November 2022. Each company shut down their businesses to close the record even as the FTX case continued.
Celsius founder Mashinsky arrested, company faces multiple US charges (Forbes)
Celsius founder Machinsi hit by New York state fraud suit (Forbes)
He said that the restart of the bankrupt Celsius is the best option for crypto customersBloomberg)
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