Celsius Network has secured the approval of the US bankruptcy court to restructure its business. In the plan, the company has promised to return crypto assets to customers and outlined a new vision. This marks an important phase for the crypto lender, which filed for bankruptcy protection last year.
According to a report by Reuters, Celsius Network will focus on mining new Bitcoin and earning staking fees by validating blockchain transactions under the management of Fahrenheit LLC, a consortium spearheaded by Arrington Capital. Approximately 600,000 Celsius' clients, who held an estimated $4.4 billion in interest-bearing accounts, suffered losses when the company collapsed.
Celsius Navigates Insolvency
Last year, Celsius filed for bankruptcy protection, freezing customers' accounts to prevent withdrawals. The restructuring plan aims to rectify this situation, with Celsius expecting to emerge from bankruptcy in early 2024. As part of the plan, Fahrenheit will acquire a minority stake in the reorganized Celsius for $50 million. The new company will be publicly listed on Nasdaq.
Additionally, the restructuring plan has addressed legal matters facing the company. This involves the valuation of Celsius' proprietary crypto token, CEL, at 25 cents. An examiner appointed by the court had previously raised concerns about the inflation of the token. Besides that, the reorganized company plans to pursue litigation against Celsius' Founder, Alex Mashinsky.
Legal Hurdles Ahead
In September, the Former Chief Revenue Officer of Celsius, Roni Cohen-Pavon, pleaded guilty in the US District Court for the Southern District of New York, Finance Magnates reported. The guilty plea was in response to charges related to a series of fraudulent activities and price manipulations.
While Cohen-Pavon awaits his sentencing hearing on December 11, the CEO of Celsius Network, Alex Mashinsky, has pleaded not guilty. Despite Cohen-Pavon's guilty admission, Mashinsky has contested all the charges against him and is out on a bond of $40 million.
The US authorities froze some of Mashinsky's assets, including bank accounts and a property in Austin, Texas. This move aimed to secure potential restitution for those affected by the collapse of Celsius. Simultaneously, Mashinsky's legal team has challenged the Federal Trade Commission's case against him, seeking its dismissal.
