A U.S. bankruptcy judge approved the firm’s reorganization plan, which will return some crypto assets to customers and form a new company around its mining and staking.
Celsius has received approval to exit bankruptcy.
Photo by Denny Muller on Unsplash
Posted November 9, 2023 at 2:29 pm EST.
Celsius Network received approval from a New York court on Thursday to end its bankruptcy case, which will release most of its remaining cryptocurrency assets back to customers whose funds have been frozen since the company filed for Chapter 11 protection in July 2022, according to The Wall Street Journal.
In his approval opinion, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the plan from the crypto lender to exit bankruptcy, which includes permission to form a new company built around the existing crypto mining and staking operations.Celsius won’t accept deposits or make loans.
In late September, the majority of Celsius customers approved the reorganization plan, which will repay the customers an estimated 37 cents for dollar value of the digital assets held in Celsius at the time of the bankruptcy.
The customers will also receive shares of the new company, which Celsius is estimating will be worth another 30 cents on the dollar of customer deposits. The company will be managed by an investor consortium called Fahrenheit, which is led by Arrington Capital and TechCrunch founder Michael Arrington.
Customers are also receiving shares in the new company managed by Fahrenheit, estimated by Celsius to be worth an additional 30 cents on the dollar of customers’ deposits. Fahrenheit has agreed to invest $50 million in the new company, which will also be seeded with $450 million in crypto held by Celsius to fund the mining business as well as future staking activities.
The bankruptcy exit plan also created a path forward for potential litigation against the former management of Celsius for their roles in its collapse, which was caused by improper lending of client funds. Former CEO Alex Mashinsky was arrested in July 2023 and is scheduled to go to court in September 2024.
