Celsius Network Exits Bankruptcy: Court Approval Sees End of One of Crypto’s Largest Failures
Celsius Case Comes to Close
Crypto platform Celsius Network has received court approval to conclude its bankruptcy case. Customers had been unable to access their crypto since withdrawals were put on hold in 2022. This decision, made by a New York bankruptcy court, allows the release of most of the remaining funds to its customers. The approved plan also involves establishing a new company focused on Celsius’s crypto mining and staking activities. This marks the end of a unique bankruptcy process heavily influenced by individual customers seeking to affect the outcome.
This follows the platform’s account freeze last year, which revealed a US$ 1.2 billion (AU$ 1.86 billion) deficit in its balance sheet, representing one of the largest collapses in the crypto industry. U.S. Bankruptcy Judge Martin Glenn approved Celsius’s proposed plan and dismissed the remaining challenges against the reorganisation plan.
The new company, managed by Fahrenheit LLC (including Arrington Capital), will focus on Bitcoin mining and earning fees from blockchain transaction validation.
Celsius, previously valued at US $3 billion (AU$ 4.6 billion), filed for Chapter 11 protection in July 2022 after freezing customer withdrawals. The plan, which aims for Celsius to emerge from Chapter 11 in early 2024, includes a public listing of the new company’s stock on Nasdaq.
This permits customers to trade the ownership stakes they obtained during their bankruptcy settlement. Additionally, customers will receive partial repayment of their cryptocurrency deposits, with about US$ 2 billion (AU$ 3.1 billion) in crypto expected to be returned to account holders.
However, this does not mean that they will receive all their crypto back; according to X user CelsiusFacts, most customers can expect to receive roughly 80% of their funds back.
After allegations surfaced that Celsius artificially raised its token’s value in a manner akin to a Ponzi scheme, the restructured company plans to initiate legal action against its founder, Alex Mashinsky. Mashinsky is currently facing criminal charges in the U.S. and a civil lawsuit accusing him of deceiving customers and boosting the value of the CEL token. He has entered a plea of not guilty.
Michael Arrington, founder of Arrington Capital, said:
Today marks the culmination of a journey that has been far too long and far too expensive for Celsius creditors. We are eager to dig in on our go-forward plan to make things whole for our creditors.