Celsius Network has received approval from the New York bankruptcy court for its restructuring plan, allowing the cryptocurrency lending platform to emerge from bankruptcy after more than a year.
Judge Martin Glenn of the US Bankruptcy Court Southern District of New York issued an order confirming Celsius’ restructuring plan under section 1129 of the Bankruptcy Code. The plan involves transitioning into a new bitcoin mining entity named NewCo, owned by creditors. The court ruling outlines the redistribution of $2 billion worth of BTC and ETH to customers, accompanied by shares in the newly established company.
Fahrenheit LLC Consortium to Manage Restructuring Plan
Fahrenheit LLC, a consortium led by companies such as Coinbase, will oversee the management of NewCo. The majority of Celsius creditors had previously voted in favor of the plan, marking a crucial step forward for the company, which faced a liquidity crisis and collapsed in 2022.
Despite the court’s approval, NewCo’s future hinges on approval from the US Securities and Exchange Commission (SEC). A Bloomberg report indicates that SEC approval is necessary for the bitcoin mining firm. Judge Glenn has urged the SEC to make a decision on Celsius’ plan. If approval is not granted, the crypto lender may face liquidation.
Celsius Legal Challenges and CEO’s Trial
While the crypto firm celebrates its exit from bankruptcy, former CEO Alex Mashinsky is slated to stand trial in September 2024. Mashinsky, accused of defrauding Celsius customers and manipulating the value of CEL, was arrested in July 2023. Despite the allegations, he denies any wrongdoing and has pleaded not guilty.
In a divergence of legal outcomes, another former Celsius executive, Roni Cohen-Pavon, pleaded guilty to criminal charges and is cooperating with investigators. This stands in contrast to Mashinsky’s legal battle.
Celsius Network reached a settlement with the Federal Trade Commission (FTC) to pay a substantial $4.7 billion fine. The agreement includes a ban on the firm and its entities from handling customer funds, marking a resolution to part of the legal challenges the company has faced.