Celsius Network Saved From Bankruptcy and Gets a Fresh Start
Celsius Network, a crypto lending platform, has gained approval from a U.S. bankruptcy court for its restructuring strategy.
This plan aims to reimburse customers with their cryptocurrency holdings and establish a new entity owned by Celsius creditors.
The court order for the restructuring, approved by U.S. Bankruptcy Judge Martin Glenn in Manhattan and published recently, paves the way for a reorganized business overseen by Fahrenheit LLC, a consortium featuring Arrington Capital, a hedge fund. The focus of this new venture will involve mining new bitcoins and generating income through “staking” fees by verifying blockchain transactions.
Back in July 2022, New Jersey-based Celsius filed for Chapter 11 protection after suspending customer account withdrawals. This move followed a significant decline, marking one of the major crypto collapses in the previous year for Celsius, previously valued at $3 billion.
Michael Arrington, the founder of Arrington Capital, highlighted that Celsius’ revival differs from other failed crypto companies unable to restructure after their collapses in 2022.
In the plan, Fahrenheit will invest $50 million for a minority stake in the restructured Celsius. The new company’s stock will be publicly listed on Nasdaq, offering Celsius customers the opportunity to sell equity shares obtained as part of their bankruptcy recovery, as outlined in court documents.
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As part of this restructuring, Celsius customers are set to receive a partial reimbursement of their deposited cryptocurrency assets held in Celsius accounts, which amassed approximately $4.4 billion across 600,000 customers at the time of the bankruptcy filing.
The restructuring includes a settlement that evaluates Celsius’s native crypto token, CEL, at 25 cents. An examiner appointed by the court reported earlier that Celsius had artificially inflated the value of its token to benefit company insiders, using methods described as “very Ponzi-like” by Celsius staff.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
