The crypto lender filed for Chapter 11 protection in July last year, one month after freezing customer accounts to prevent withdrawals
Crypto lender Celsius Network received the approval of U.S. bankruptcy court for a restructuring plan that will return crypto currency to customers and create a new firm owned by Celsius creditors.
U.S. Bankruptcy Judge Martin Glenn in Manhattan signed off on the restructuring in an order published Thursday. The reorganized business will be managed by Fahrenheit LLC, a consortium that includes hedge fund Arrington Capital, and it will focus on mining new bitcoin and earning “staking” fees by validating blockchain transactions.
The crypto lender filed for Chapter 11 protection in July last year, one month after freezing customer accounts to prevent withdrawals. Celsius, which was once valued at $3 billion, was one of the biggest crypto collapses last year.
Celsius is working to implement the plan and is expected to emerge from Chapter 11 early next year, according to a post on X, formerly known as Twitter.
Michael Arrington, founder of Arrington Capital, on Thursday said Celsius’ revival stands apart from other crypto firms that collapsed in 2022 and were unable to reorganize.
Crypto lenders BlockFi and Voyager Digital were wiped out in bankruptcy, and crypto currency exchange FTX remains stuck in Chapter 11 proceedings.
Today marks the culmination of a journey that has been far too long and far too expensive for Celsius creditors, Arrington stated in an email.
Fahrenheit will buy a minority stake in the reorganized Celsius for $50 million and will publicly list the new firm’s stock on Nasdaq, permitting Celsius customers to sell equity shares that they will receive as part of their bankruptcy recovery, as per court documents.
Apart from their stake in the new firm, Celsius customers will receive a partial repayment of the crypto currency assets they deposited on the platform.
The crypto lender said on Thursday it would return nearly $2 billion in crypto currency to account holders.
Celsius had 600,000 customers who held nearly $4.4 billion in interest-bearing Celsius accounts when it filed for bankruptcy, as per court documents.
The restructuring plan includes a settlement that values Celsius’s proprietary crypto token, CEL, at 25 cents. A court-appointed examiner reported in January that Celsius inflated the value of its own token to benefit firm insiders, using methods that Celsius staff described as “very Ponzi-like.”
