Celsius Network, a crypto lender that went bankrupt in July 2022, will distribute over $3 billion of cryptocurrency and fiat to its creditors as the company emerges from bankruptcy. The plan also includes creating a Bitcoin mining company, Ionic Digital, and existing Celsius creditors will receive a stake in it.
Restructuring of Celsius
Announced yesterday (Wednesday), the reorganization plan was approved by about 98 percent of Celsius’ account holders and cleared by the bankruptcy court last November.
The company additionally increased the amount of cryptocurrencies distributed among the creditors by $250 million. These proceeds were obtained by converting altcoins to BTC or ETH and through previous settlements.
A separate court filing revealed that PayPal and Coinbase will distribute the cryptocurrencies to the creditors of Celsius. Additionally, Celsius will shut down its operations, including mobile and web applications, by February 28.
A New Mining Company
Further, the new mining company, managed by Hut 8 with a four-year management agreement, will provide returns to creditors who will hold equity in the form of common stocks. Hut 8’s Chief Commercial Officer, Matt Prusak, has been named as the CEO of Ionic Digital.
“When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time,” David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, said. “We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues.”
The two highlighted that Celsius negotiated and settled not only with the creditors but with US enforcement agencies, including the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
Earlier, the company faced fraud charges and settled with the US agencies, paying $4.7 billion during the bankruptcy process. Its former CEO, Alex Mashinsky, was arrested on fraud charges but was later released with a $40 million bail bond.
“We are proud of the preservation and distribution of cryptocurrency assets and enhanced recovery for customers and claim holders,” added Barse and Carr.
