Celsius Network has secured the approval of the US
bankruptcy court to restructure its business. The plan has promised the return
of cryptocurrency to customers and outlined the vision of the company. 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 through blockchain
transaction validation 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 filed for Chapter 11 protection amid
financial turmoil, freezing customer accounts to prevent withdrawals. The
restructuring plan aims to rectify the situation, with Celsius expecting to
emerge from Chapter 11 in early 2024. As part of the restructuring plan,
Fahrenheit will acquire a minority stake in the reorganized Celsius for $50
million. The new company’s stock will be publicly listed on
Nasdaq.
The restructuring plan also addressed legal matters,
valuing Celsius’ proprietary crypto token, CEL, at 25 cents. A court-appointed
examiner had previously raised concerns about the token’s value inflation.
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 Network, Roni Cohen-Pavon, pleaded guilty in the US District Court for
the Southern District of New York, Finance Magnates reported. The guilty plea
was a response to charges related to a series of fraudulent activities and
price manipulations.
While Cohen-Pavon awaits his sentencing hearing on
December 11, Celsius Network’s CEO, Alex Mashinsky, remains steadfast in his
not-guilty plea. Despite Cohen-Pavon’s guilty admission, Mashinsky continues to
contest all charges and is currently free on a $40 million bond, awaiting the
legal battles that lie ahead.
The US authorities
freezing some of Mashinsky’s assets, including bank accounts and a property in
Austin, Texas. This move aims to secure potential restitution for those
affected by the collapse of the Celsius Network. Simultaneously, Mashinsky’s
legal team challenges the Federal Trade Commission’s case against him, seeking
its dismissal.
Celsius Network has secured the approval of the US
bankruptcy court to restructure its…
