U.S. Bankruptcy Judge Martin Glenn in Manhattan has approved Celsius Network’s restructuring plan. The plan, initiated after the crypto lender filed for Chapter 11 protection in July 2022, includes measures to return approximately $2 billion in cryptocurrency to its customers.
The restructuring will be overseen by Fahrenheit LLC, a consortium led by Arrington Capital, with a strategic focus on mining Bitcoin and earning “staking” fees by validating blockchain transactions. Celsius, once valued at $3 billion, experienced a substantial decline in 2022 and froze customer accounts a month before filing for bankruptcy.
As part of the restructuring deal, Fahrenheit LLC will acquire a minority stake in the reorganised Celsius for $50 million. The new company’s stock will be publicly listed on Nasdaq, allowing Celsius customers to sell equity shares received during the bankruptcy recovery process.
Celsius, which had 600,000 customers holding approximately $4.4 billion in interest-bearing accounts at the time of bankruptcy filing, aims to complete the restructuring and emerge from Chapter 11 in early 2024, according to a statement on X, formerly known as Twitter.
The restructuring plan also addresses concerns raised during the bankruptcy proceedings, including the valuation of Celsius’s proprietary crypto token, CEL, at 25 cents. A court-appointed examiner’s report in January accused Celsius of inflating the token’s value, describing the methods used as “very Ponzi-like” by the company’s staff.
Additionally, the reorganised company intends to pursue litigation against Celsius founder Alex Mashinsky, who is currently facing U.S. criminal charges and a New York civil lawsuit. The charges allege that Mashinsky misled customers and artificially inflated the value of CEL. Mashinsky has pleaded not guilty to these charges.
