Celsius Network Obtains Approval for Restructuring

Celsius Network Obtains Approval for Restructuring

Time Stamp: November 10, 2023 3:20 PM
Source Node: 2968793

Celsius Network has secured the approval of the US bankruptcy court to restructure its business. In the plan, the company has promised to return crypto assets to customers and outlined a new vision for moving forward. This marks an important phase for the crypto lender, which filed for bankruptcy protection last year.

According to a report by Reuters, Celsius Network will focus on mining new Bitcoin and earning staking fees through blockchain transaction validation under the management of Fahrenheit LLC, a consortium spearheaded by Arrington Capital. Approximately 600,000 Celsius' clients, who held an estimated $4.4 billion in interest-bearing accounts, suffered losses when the company collapsed.

Celsius filed for Chapter 11 protection amid financial turmoil, freezing customer accounts to prevent withdrawals. The restructuring plan aims to rectify the situation, with Celsius expecting to emerge from bankruptcy in early 2024. As part of the restructuring plan, Fahrenheit will acquire a minority stake in the reorganized Celsius for $50 million. The new company will be publicly listed on Nasdaq.

Additionally, the restructuring plan has addressed legal matters facing the company, valuing Celsius' proprietary crypto token, CEL, at 25 cents. An examiner appointed by the court had previously raised concerns about the inflation of the token. Besides that, the reorganized company plans to pursue litigation against Celsius' Founder, Alex Mashinsky.

Legal Hurdles Ahead

In September, the Former Chief Revenue Officer of Celsius Network, Roni Cohen-Pavon, pleaded guilty in the US District Court for the Southern District of New York, Finance Magnates reported. The guilty plea was a response to charges related to a series of fraudulent activities and price manipulations.

While Cohen-Pavon awaits his sentencing hearing on December 11, Celsius Network's CEO, Alex Mashinsky, has pleaded not guilty. Despite Cohen-Pavon's guilty admission, Mashinsky continues to contest all charges and is currently free on a $40 million bond.

The US authorities froze some of Mashinsky's assets, including bank accounts and a property in Austin, Texas. This move aims to secure potential restitution for those affected by the collapse of the Celsius Network. Simultaneously, Mashinsky's legal team has challenged the Federal Trade Commission's case against him, seeking its dismissal.

Celsius Network has secured the approval of the US bankruptcy court to restructure its business. In the plan, the company has promised to return crypto assets to customers and outlined a new vision for moving forward. This marks an important phase for the crypto lender, which filed for bankruptcy protection last year.

According to a report by Reuters, Celsius Network will focus on mining new Bitcoin and earning staking fees through blockchain transaction validation under the management of Fahrenheit LLC, a consortium spearheaded by Arrington Capital. Approximately 600,000 Celsius' clients, who held an estimated $4.4 billion in interest-bearing accounts, suffered losses when the company collapsed.

Celsius filed for Chapter 11 protection amid financial turmoil, freezing customer accounts to prevent withdrawals. The restructuring plan aims to rectify the situation, with Celsius expecting to emerge from bankruptcy in early 2024. As part of the restructuring plan, Fahrenheit will acquire a minority stake in the reorganized Celsius for $50 million. The new company will be publicly listed on Nasdaq.

Additionally, the restructuring plan has addressed legal matters facing the company, valuing Celsius' proprietary crypto token, CEL, at 25 cents. An examiner appointed by the court had previously raised concerns about the inflation of the token. Besides that, the reorganized company plans to pursue litigation against Celsius' Founder, Alex Mashinsky.

Legal Hurdles Ahead

In September, the Former Chief Revenue Officer of Celsius Network, Roni Cohen-Pavon, pleaded guilty in the US District Court for the Southern District of New York, Finance Magnates reported. The guilty plea was a response to charges related to a series of fraudulent activities and price manipulations.

While Cohen-Pavon awaits his sentencing hearing on December 11, Celsius Network's CEO, Alex Mashinsky, has pleaded not guilty. Despite Cohen-Pavon's guilty admission, Mashinsky continues to contest all charges and is currently free on a $40 million bond.

The US authorities froze some of Mashinsky's assets, including bank accounts and a property in Austin, Texas. This move aims to secure potential restitution for those affected by the collapse of the Celsius Network. Simultaneously, Mashinsky's legal team has challenged the Federal Trade Commission's case against him, seeking its dismissal.

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