protection Crypto Lender Celsius Network Receives Court Approval to Exit Bankruptcy Protection


NEW YORK, Nov 9 (Reuters) – Crypto lender Celsius Network received U.S. bankruptcy court approval for a restructuring plan that will return cryptocurrency to customers and create a new company owned by Celsius creditors.

U.S. Bankruptcy Judge Martin Glenn in Manhattan signed off on the restructuring in an order published on Thursday. The reorganized business, managed by Fahrenheit LLC, a consortium that includes hedge fund Arrington Capital, will focus on mining new Bitcoin and earning “staking” fees by validating blockchain transactions.

New Jersey-based Celsius filed for Chapter 11 protection in July 2022, one month after freezing customer accounts to prevent withdrawals. Celsius, which was once valued at $3 billion, was one of the largest crypto collapses last year.

Michael Arrington, founder of Arrington Capital, said Celsius’ revival stands apart from other crypto companies that collapsed in 2022 and were unable to reorganize. BlockFi and Voyager Digital were wiped out in bankruptcy, and cryptocurrency exchange FTX remains stuck in Chapter 11 proceedings.

Fahrenheit will buy a minority stake in the reorganized Celsius for $50 million and will publicly list the new company’s stock on Nasdaq, allowing Celsius customers to sell equity shares that they will receive as part of their bankruptcy recovery.

In addition to their stake in the new company, Celsius customers will receive a partial repayment of the cryptocurrency assets they deposited on the platform. Celsius said on Thursday it would return about $2 billion in cryptocurrency to account holders.

The restructuring plan includes a settlement that values Celsius’ proprietary crypto token, CEL, at 25 cents. A court-appointed examiner reported in January that Celsius inflated the value of its own token to benefit company insiders, using methods that Celsius staff described as “very Ponzi-like.”

The reorganized company will pursue litigation against Celsius founder Alex Mashinsky, who already faces U.S. criminal charges and a New York civil lawsuit for allegedly misleading customers and artificially inflating the value of CEL. Mashinsky has pleaded not guilty.

Reporting by Dietrich Knauth; Additional reporting by Urvi Dugar Editing by Alexia Garamfalvi, Lisa Shumaker, Bill Berkrot and Diane Craft. Our Standards: The Thomson Reuters Trust Principles.

Celsius customers can acquire licensing rights by clicking the provided button; this will open a new tab.

Related articles

Recent articles