Key takeaways:
- Celsius Network may need to get a new vote from creditors before moving forward with its ambition to become a Bitcoin mining company.
- Celsius attorney Chris Koenig allegedly argued that the company has the flexibility to transition to a mining-only business because of the court-approved bankruptcy plan.
As a US bankruptcy judge made clear in a recent court session, Celsius Network, a cryptocurrency lending platform, may need to get a new vote from creditors before moving forward with its ambition to become a Bitcoin mining company.
On Thursday, November 30, the cryptocurrency lender revealed the specifics of its intention to begin mining Bitcoin only after it files for bankruptcy, a reorganized operation that takes regulatory advice into account.
In response to the sudden change, Judge Martin Glenn, who oversees Celsius Network’s Chapter 11 proceedings, reportedly expressed his displeasure on Thursday, November 30, highlighting his repeated advice to Celsius regarding the significance of coming to an agreement with the SEC.
Judge Glenn allegedly pointed out that the plan to turn the company into a Bitcoin mining operation differs significantly from the agreement that creditors first voted on, which may cause a lot of opposition from creditors.
Celsius has disclosed a reorganized post-bankruptcy approach, concentrating only on crypto mining as a result of the US Securities and Exchange Commission’s (SEC) doubts over its initial corporate objectives.
Celsius claimed that although the SEC didn’t explicitly oppose the company’s bankruptcy plan, it was hesitant to support cryptocurrency lending and staking, activities that it had previously disapproved of.
During Thursday’s session, Celsius attorney Chris Koenig allegedly argued that the company has the flexibility to transition to a mining-only business because of the court-approved bankruptcy plan. Koenig claims that since the amended agreement benefits creditors equally, a fresh vote is not required.
According to the report, two clients whose counsel did not represent them objected to the settlement in the court filings, arguing that Celsius ought to go through total liquidation.
In July 2022, Celsius became one of numerous cryptocurrency lenders to file for bankruptcy due to the industry’s explosive development amid the COVID-19 pandemic. The company filed for Chapter 11 protection. According to Koenig, the revised Celsius proposal frees $225 million in cryptocurrency assets from the custody of outside investors, also referred to as the Fahrenheit consortium.
According to court documents, the new proposal projects that Celsius creditors will obtain a 67% recovery, which is more than the 61.2% recovery under the previous Fahrenheit arrangement. In the previous offer, US Bitcoin Corp., a consortium member with Arrington Capital, will manage Celsius’s post-bankruptcy Bitcoin mining operation.
