Celsius entity to focus only on mining under proposed reorganization plan
The lending firm has been in bankruptcy court since its Chapter 11 filing in 2022, while the SEC filed a lawsuit against both the firm and former CEO Alex Mashinsky in July.
Cryptocurrency lending firm Celsius said its reorganized company will focus only on Bitcoin mining following feedback from the United States Securities and Exchange Commission (SEC).
In a Nov. 20 announcement, Celsius said the core business of the ‘NewCo’ company proposed under its restructuring plan will be Bitcoin (BTC) mining rather than staking. The firm said it had reached the decision to focus its efforts on mining “based on the SEC’s feedback [and] in consultation with the Official Committee of Unsecured Creditors.”
Under the restructuring, Celsius said some of its assets which it previously proposed to transfer to an entity called ‘Fahrenheit NewCo’ would be retained by the firm’s estates. The company plans to have the ‘Mining NewCo’ entity publicly traded in the United States and owned by Celsius customers.
“In the coming weeks, the Debtors intend to file a motion with the Bankruptcy Court to approve modifications to the Plan to reflect the new Mining NewCo transaction,” said Celsius. “The Debtors do not believe that these modifications will require resolicitation of the Plan. The Debtors still anticipate that distributions to creditors will commence in January of 2024.”
Following feedback from the Securities and Exchange Commission (SEC), Celsius will begin to transition to a Mining-Only NewCo. https://t.co/VVrLLjQWO8
— Celsius (@CelsiusNetwork) November 21, 2023
Related: Court confirms Celsius bankruptcy exit plan, $2B in crypto to go to creditors
Celsius filed for Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of New York in July 2022 following a pause in withdrawals at the platform. In July 2023, the SEC filed a lawsuit against Celsius and Alex Mashinsky, alleging the former CEO falsely promised a safe investment through the firm’s Earn Interest Program.
Authorities with the U.S. Justice Department arrested Mashinsky in July, charging the former Celsius CEO with securities fraud, commodities fraud and wire fraud related to allegedly defrauding customers. At the time of publication, Mashinsky remains free on $40 million bail through his trial scheduled to begin in September 2024.
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