Celsius Network, a cryptocurrency lending platform that filed for bankruptcy in July 2022, has received the green light from a court to pursue a new exit plan that involves becoming a Bitcoin mining company. The plan was approved by Judge Martin Glenn on December 27, after the U.S. SEC rejected a previous proposal that would have created a diversified business entity called NewCo, managed by a consortium of crypto firms.
The new plan, which was supported by Celsius’ creditors, will see the company focus solely on Bitcoin mining as a public company, instead of expanding its mining and business operations under the consortium’s supervision.
The consortium, which included Proof Group, Arrington Capital, and Hut 8, had agreed to invest $225 million in crypto assets in exchange for a 49% stake in NewCo. However, the SEC refused to grant the necessary approvals for the deal, citing regulatory concerns.
The change in strategy marks a significant shift for Celsius, which was once a leading player in the crypto lending space. The company faced financial and legal troubles after its former CEO, Alex Mashinsky, was arrested in July 2023 on charges of securities fraud, commodities fraud, and wire fraud. The company also faced claims from creditors who were owed about $2 billion in Bitcoin and Ethereum.
Court Approves Celsius Network’s Shift from Lending to Mining
Under the new plan, creditors will receive part of their recovery through shares in the Bitcoin mining company, as well as a distribution of the crypto assets that were originally allocated for the consortium deal. The plan was approved despite some objections from creditors and the U.S. Department of Justice’s bankruptcy watchdog, who argued that a re-vote was necessary.
Judge Glenn, however, ruled that the new plan was consistent with the terms of the previously confirmed plan and did not harm the creditors’ interests. The move to become a Bitcoin mining company reflects Celsius’ adaptation to the regulatory and market challenges that have affected the cryptocurrency industry.
The company hopes to leverage its existing mining infrastructure and expertise to generate revenue and reestablish itself in the crypto space. The plan also highlights the growing importance of Bitcoin mining as a viable and sustainable business model for crypto firms.
