Celsius Network's Landmark Move: U.S. Bankruptcy Judge Approves Shift to Bitcoin Mining Despite SEC Challenges

In a recent ruling, U.S. Bankruptcy Judge Martin Glenn approved Celsius Network’s deviation from its initial bankruptcy plan, allowing the company to transition to bitcoin mining. The judge emphasized that creditors and customers would not face adverse effects from this restructuring.

Background: Celsius Network’s Chapter 11 Filing and SEC Rejection

Celsius Network's Landmark Move: U.S. Bankruptcy Judge Approves Shift to Bitcoin Mining Despite SEC Challenges

Celsius Network, like several other crypto lenders, filed for Chapter 11 protection in July 2022, amidst challenges arising from the industry’s rapid growth during the COVID-19 pandemic. Originally intending to earn fees from validating crypto transactions and explore new business lines, Celsius faced a setback when the U.S. Securities and Exchange Commission (SEC) rejected their proposed plan.

Facing obstacles with the SEC, Celsius invoked a backup plan outlined in the November-approved bankruptcy plan. This strategic shift also involved parting ways with previously selected outside bidders, placing mining firm US Bitcoin Corp, led by Hut 8’s Asher Genoot, in charge of the new creditor-owned mining venture.

Despite objections from some creditors and the U.S. Department of Justice’s bankruptcy watchdog, arguing that the change warranted a new vote by creditors, Judge Glenn ultimately approved the transition without such a requirement. Celsius’ interim CEO, Chris Ferraro, expressed enthusiasm, emphasizing the positive impact on creditors and the company’s commitment to promptly distributing cryptocurrency.

Future Outlook: Celsius Aims for Emergence from Bankruptcy in 2024

Celsius Network's Landmark Move: U.S. Bankruptcy Judge Approves Shift to Bitcoin Mining Despite SEC Challenges
Celsius is optimistic about emerging from bankruptcy in early 2024. The revised bankruptcy plan not only facilitates the company’s pivot to bitcoin mining but also frees up $225 million in cryptocurrency assets initially earmarked for rejected business lines.

This adjustment provides an opportunity for more substantial cryptocurrency returns to customers. Moreover, customers will receive equity shares in the newly established bitcoin mining business, as outlined in the approved restructuring. The decision marks a significant development in Celsius Network’s journey through the challenges of bankruptcy and regulatory hurdles.