Celsius, a cryptocurrency lending firm, has successfully navigated its way out of Chapter 11 bankruptcy in the United States. The company is now set to redistribute $3 billion in crypto and fiat assets to its creditors and is launching a new venture in the Bitcoin mining sector.
In a press release dated January 31, Celsius announced the establishment of Ionic Digital, a Bitcoin mining company. This new entity will be managed by Hut 8, a renowned name in the crypto mining industry, with Hut 8’s chief commercial officer, Matt Prusak, leading the helm. The goal of Ionic Digital is not only to engage in Bitcoin mining activities but also to aid in the recovery process for creditors. Plans are in place for Ionic Digital’s stock to become publicly traded, pending necessary approvals.
An overwhelming majority of Celsius’ creditors, approximately 98%, consented to the bankruptcy exit plan. This agreement comes more than a year and a half after Celsius initially halted withdrawals in June 2022 and subsequently filed for bankruptcy the following month. Celsius has managed to increase the funds available for distribution to creditors by about $250 million. This increase was achieved by converting various altcoins to Bitcoin (BTC) or Ethereum (ETH) and through prior settlements.
Celsius is in the process of winding down its operations and plans to discontinue its mobile and web applications by February 28. The distribution of funds to creditors will be conducted through various platforms, including PayPal, Venmo, and Coinbase. Creditors have reportedly received claims forms, indicating the commencement of the distribution process.
The successful exit from bankruptcy by Celsius is seen as a significant achievement, especially considering the fate of other crypto lenders who faced bankruptcy around the same time. This recovery was spearheaded by a dedicated team, including special board members David Barse and Alan Carr.
Celsius’ decision to pause withdrawals was initially framed as a strategic move to better meet withdrawal obligations over time, particularly following the steep decline in the value of its native token, Celsius (CEL), in 2022. The company’s bankruptcy journey involved settling $4.7 billion in fines with the United States Federal Trade Commission and reaching agreements with the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
Alex Mashinsky, the former CEO of Celsius, faced arrest and charges by federal prosecutors for various financial frauds, including manipulating the price of CEL and misleading customers. Mashinsky has pleaded not guilty to these charges and is currently out on a $40 million bond, with his trial scheduled for September.
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