Celsius seeks to start repaying customers soon
Embattled crypto lender Celsius Network is seeking court approval to start repaying its customers by the end of the year. The company informed a judge during an October 2 heading for its reorganisation plan.
#Celsius will distribute at least $2.03B of crypto to Creditors.
Meanwhile, NewCo will be seeded with up to $450 million in crypto.
— Celsius NewCo Community (@CelsiusNewCo) October 2, 2023
Celsius’ legal counsel, Christopher Koenig, told the court that the new company, called NewCo, is set to emerge from the proceedings with $450 million in seed funding.
The cryptocurrency lender is now looking to partially repay its creditors using $2.03 billion in Bitcoin and Ethereum and stock in the new company. So far, NewCo has received backing from a consortium called Fahrenheit LLC. The consortium is set to manage the mining and staking business of the company.
The judge, Martin Glenn, is currently considering the possibility of approving Celsius’s restructuring plan. However, the plan will need to be approved by security regulators in the US.
While the majority of creditors have approved the reorganisation plan, some are not in favour of it. Celsius said,
“The Debtors arrive at Confirmation with a Plan that has the support of over 95% of voting Account Holders by both number and dollar amount.”
Celsius could soon be resurrected after filing for bankruptcy
Celsius declared bankruptcy more than a year ago and has been under fire by security regulators. In July, the US Federal Trade Commission slapped Celsius Network with a $4.7B fine for squandering billions in user deposits.
Its founder, Alex Mashinsky, is still in court after pleading not guilty to fraud charges filed against him by the US Department of Justice.
If the Celsius plan is approved, it would become one of the first failed crypto platforms from last year to be resurrected after filing for a Chapter 11 bankruptcy.
The company halted withdrawals in June 2022 following the collapse of the Terra/Luna project, and investors have been waiting since then to access their funds.