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Failed cryptocurrency lender Celsius received approval from a US bankruptcy court to proceed with its restructuring plan. The plan will return crypto to Celsius customers and create a new company owned by its creditors.
On Thursday, bankrupt cryptocurrency lender Celsius Network received bankruptcy court approval for its proposed restructuring plan. US Bankruptcy Judge Martin Glenn confirmed that Celsius may return cryptocurrency to its customers and create a new company owned by its creditors, NewCo.
According to reports by Bloomberg, Celsius will repay its customers through a combination of cryptoassets and stock in the new publicly listed Bitcoin mining company. Lawyers for the crypto lender said Celsius could start distributing assets in early 2024.
We are pleased to share that, following a successful creditor voting process and Confirmation hearing, the Court confirmed our Plan of Reorganization. https://t.co/bSemZ5f0k8
— Celsius (@CelsiusNetwork) November 10, 2023
In June 2022, Celsius suspended customer withdrawals due to “extreme market conditions” to maintain its liquidity.
Crypto Consortium Fahrenheit to Manage Reorganized Business
In September, Celsius’ creditors voted in favour of its reorganization plan. According to the plan, cryptocurrency consortium Fahrenheit LLC, which includes hedge fund Arrington Capital, will manage the restructured business. Customers will receive around $2 billion in ether (ETH), bitcoin (BTC), and equity in NewCo.
In July, the Fahrenheit consortium won the bid to acquire Celsius and its assets. Fahrenheit acquired Celsius’ staked crypto, institutional loan portfolio, mining unit, and any additional alternative investments. The Fahrenheit consortium is backed by Arrington Capital, US Bitcoin Corp, Steven Kokinos, Ravi Kaza, and Proof Group.
SEC Yet To Approve Celsius Bankruptcy Plan
Celsius’ proposed plan to repay its creditors has not been met with enthusiasm across the board. The Securities and Exchange Commission (SEC) must still approve the plan. Judge Martin Glenn called on the agency to quickly decide whether to approve the plan so the company could exit Chapter 11 bankruptcy proceedings. The SEC filed a lawsuit against the company and its CEO, Alex Mashinsky. Mashinsky was arrested in July following an investigation into the Celsius collapse.
In its lawsuit, the SEC accused Mashinsky and several other Celsius executives of raising billions through fraudulent and unregistered offers and selling “crypto asset securities” without the necessary approval and licensing. The securities agency further alleged that Celsius and Mashinsky repeatedly lied to investors about the company’s financial position and manipulated the price of the company’s native token, CEL.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.