On Thursday, a Delaware bankruptcy court approved a customer repayment plan for Celsius Network, a failed crypto lending company, thus setting it on track to exit bankruptcy. The plan, which was presented to the court on October 2nd, will see the creation of a new entity called NewCo. This entity will be funded with $450 million and focus on Bitcoin mining and staking, with ownership shared between Celsius’ customers and creditors.
When the firm collapsed last summer, alongside other high-profile crypto companies, it had over $25 billion in assets under management. The Fahrenheit Group, which won its bid to acquire Celsius in May, will now manage the company. NewCo will also aim to become a publicly traded company listed on the Nasdaq in order to maximize liquidity for creditors.
As part of the approved plan, Celsius creditors will receive at least $2.03 billion in cryptocurrency. Repayments could start early next year, according to Bloomberg News. However, Alex Mashinsky, the former CEO and co-founder of Celsius, has been hit with multiple criminal charges and civil lawsuits for his conduct at the helm of the company, with the U.S. Department of Justice, Securities and Exchange Commission (SEC), Commodities Futures Trading Commission, and Federal Trade Commission all taking action.
CEL token price spiked to $0.25 on Wednesday, but has since fallen to $0.23, a 7% decrease over the past day. U.S. Bankruptcy Judge Martin Glenn approved the plan without ruling on whether digital assets belonging to Celsius’ creditors are securities or commodities. However, he made it clear that the SEC has the right to challenge any transactions involving crypto tokens.