Cryptocurrency lender Celsius Network’s (CEL) unexpected decision to narrow its post-bankruptcy plans to just bitcoin mining has rankled the judge overseeing its Chapter 11 restructuring.
U.S. Bankruptcy Judge Martin Glenn said Thursday he’d long pushed Celsius to gain regulatory approval for its broader business. Instead, CEL now proposes ditching crypto lending and staking citing unnamed Securities and Exchange Commission scepticism.
“This is not the deal that the creditors voted on,” Glenn warned, suggesting the stripped-down mining focus could spur “substantial opposition.” Celsius attorney Chris Koenig contended flexibility allowed the pivot without a fresh vote.
But dumping outside investors group Fahrenheit could also spark backlash. Though creditor returns may rise to 67% under mining firm US Bitcoin Corp’s rival bid, spurned suitor Blockchain Recovery Investment Consortium cried foul over violating its backup-bidder pact.
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Glenn’s evident frustration over the surprise mining move could force Celsius to renegotiate with creditors. Its push to appease regulators may have instead alienated supporters of the original, wider rebuilding plan.
The judge’s dim view of Celsius’s gambit bodes ill for easy approval, even with higher recovery forecasts. With crypto still lacking regulatory guardrails, Celsius’s wariness of SEC scrutiny may have backed it into a corner.
