Celsius, the cryptocurrency lending firm, has announced a strategic shift in its restructuring plan, signaling a move towards a singular focus on Bitcoin mining. The decision comes in response to feedback from the United States Securities and Exchange Commission (SEC) and consultations with the Official Committee of Unsecured Creditors.
Celsius’ Journey Through Chapter 11
Since filing for Chapter 11 protection in the U.S. Bankruptcy Court in July 2022, Celsius has been navigating the complexities of its financial situation. The platform faced challenges, including a temporary halt in withdrawals, leading to a bankruptcy court intervention.
Adding to the complexities, in July 2023, the SEC filed a lawsuit against Celsius and its former CEO, Alex Mashinsky. Notably, the lawsuit alleged false promises regarding a secure investment through the firm’s Earn interest program, leading to legal repercussions for Mashinsky.
New Direction: Mining NewCo Emerges
In its November 20 announcement, Celsius outlined the transformation of the proposed “NewCo” entity, emphasizing a shift towards Bitcoin mining over staking. Also, this decision is a direct outcome of the SEC’s feedback and collaborative discussions with stakeholders.
Under the restructured plan, Celsius revealed adjustments in the distribution of assets. Previously earmarked for transfer to “Fahrenheit NewCo,” some assets will now be retained by Celsius’ estates.
Celsius envisions the “Mining NewCo” entity as publicly traded in the United States, with ownership vested in Celsius customers. This innovative approach aims to align the company’s fortunes with those who have supported it.
Next Steps: Legal Proceedings and Timeline
Looking ahead, Celsius plans to file a motion with the Bankruptcy Court, seeking approval for modifications reflecting the new Mining NewCo transaction. The company remains optimistic that these adjustments will not necessitate resolicitation of the restructuring plan. Anticipated distributions to creditors are slated to commence in January 2024.
Meanwhile, Alex Mashinsky, facing charges of securities fraud, commodities fraud, and wire fraud, is set for trial in September 2024. Despite his arrest in July, he is currently free on $40 million bail.