By Celsius Network’s shift toward bitcoin mining has received the green light from a U.S. bankruptcy court. The decision allows the company to veer from its previous bankruptcy plan, with the court deeming that creditors and customers wouldn’t face detrimental impacts under the revised restructuring.
In Manhattan, U.S. Bankruptcy Judge Martin Glenn backed Celsius Network’s adaptation to a backup strategy after encountering obstacles with the U.S. Securities and Exchange Commission (SEC). This move came despite an initially approved plan in November, which possessed enough flexibility to accommodate such adjustments.
Following its Chapter 11 filing in July 2022 amidst the industry’s upheaval amid the COVID-19 pandemic, Celsius Network had to recalibrate its goals. The rejection of its initial plan by the SEC led to a strategic pivot, redirecting its focus from earning transaction fees to venturing into bitcoin mining.
This switch also altered the management landscape, separating Celsius from its previously chosen external entities and placing US Bitcoin Corp, led by Hut 8’s Asher Genoot, squarely in control of the newly structured mining endeavor owned by creditors.
Originally part of a consortium known as “Fahrenheit,” which included Arrington Capital among others, US Bitcoin Corp found itself taking the lead role. Some creditors and the U.S. Department of Justice’s bankruptcy watchdog contested this significant change, advocating for a fresh vote by creditors. While Judge Glenn initially showed sympathy toward this viewpoint during a court hearing in November, he ultimately endorsed the revised plan without necessitating a new vote.
“This marks a pivotal moment for Celsius creditors, staying true to our commitment of promptly distributing cryptocurrency,” remarked Celsius’ interim CEO, Chris Ferraro, expressing enthusiasm about the court’s decision.
Celsius anticipates its emergence from bankruptcy in early 2024. Moreover, the adjusted bankruptcy plan frees up $225 million in cryptocurrency assets, initially slated for the rejected business expansions, enabling a greater return of cryptocurrency to customers. Additionally, customers will receive equity shares in the new bitcoin mining venture, as highlighted by Glenn’s decision.
