Celsius Network LLC, the failed crypto lender, won bankruptcy court approval on Thursday to transform into a creditor-owned Bitcoin mining firm. The plan, which has been met with skepticism from some customers and faces regulatory hurdles, would see Celsius repay customers through a combination of cryptoassets and stock in the new, publicly listed Bitcoin mining company.
US Bankruptcy Judge Martin Glenn said he would confirm the firm’s plan to repay customers, which could start early next year. The ruling is a major milestone for the firm, which went bankrupt last year amid a downturn in digital assets but won enough creditor support for a path through Chapter 11 despite fraud allegations against former executives.
Federal prosecutors have accused former Celsius CEO Alex Mashinsky of manipulating the firm’s native CEL token and making misleading statements to get customers to invest their assets on the platform. Mashinsky has pleaded not guilty.
The firm’s transformation into a crypto miner has raised concerns among some customers, who argue that the plan is too risky and that they will not be adequately compensated for their losses. The company has said that the plan is the best way to repay customers and that it is committed to making them whole.
The plan still faces regulatory hurdles, including approval from the US Securities and Exchange Commission. The firm has said that it could pivot to a liquidation if the crypto mining proposal falls through.
Judge Glenn has urged the SEC to move quickly in deciding whether or not to approve the crypto lender’s plan. He has said that the company’s customers have been waiting too long to get their money back.
Key takeaways:
- The Network has won bankruptcy court approval to transform into a creditor-owned Bitcoin mining firm.
- The plan would see Celsius repay customers through a combination of cryptoassets and stock in the new mining company.
- The plan has been met with skepticism from some customers and faces regulatory hurdles.
- Celsius says that the plan is the best way to repay customers and that it is committed to making them whole.
Why Celsius is transforming into a Bitcoin mining firm
Celsius is transforming into a Bitcoin mining firm because it believes that this is the best way to repay its customers and generate revenue. Bitcoin mining is a process of verifying transactions on the Bitcoin blockchain and earning rewards in the form of Bitcoin. Celsius believes that the value of Bitcoin will continue to increase over time, which will make mining more profitable.
Celsius customers will receive a combination of cryptoassets and stock in the new Bitcoin mining company as part of the repayment plan. The exact amount of cryptoassets and stock that each customer receives will depend on their individual circumstances.
Celsius has said that it could start distributing assets to customers early next year. However, this will depend on a number of factors, including regulatory approval and the market conditions.
Celsius’ plan to transform into a Bitcoin mining firm is not without risks. The Bitcoin mining industry is highly competitive and the profitability of mining can fluctuate depending on the price of Bitcoin and the difficulty of the Bitcoin network. Celsius also faces regulatory hurdles, including approval from the SEC.
Overall, Celsius’ bankruptcy court approval is a major milestone for the company and its customers. However, there are still a number of challenges that Celsius must overcome before it can repay its customers and emerge from bankruptcy.