Key takeaways:
- After filing for Chapter 11 bankruptcy in the US, Celsius plans to open a new Bitcoin mining company and begin paying creditors $3 billion in cryptocurrency and cash.
- Celsius stated that Ionic Digitial will keep paying its creditors back and that, if the necessary approvals are obtained, its stock should go public.
After filing for Chapter 11 bankruptcy in the US, Celsius plans to open a new Bitcoin mining company and begin paying creditors $3 billion in cryptocurrency and cash.
The cryptocurrency lender announced in a press release on January 31 that as a result of its bankruptcy departure, Ionic Digital—a Bitcoin mining business run by Hut 8 and led by Hut 8 Chief Commercial Officer Matt Prusak—was established.
Celsius stated that Ionic Digitial will keep paying its creditors back and that, if the necessary approvals are obtained, its stock should go public.
After Celsius stopped withdrawals in June 2022 and filed for bankruptcy a month later, about 98% of its creditors approved the bankruptcy departure plan. This was more than 18 months ago.
Celsius stated that through converting cryptocurrencies to BTC or ETH and through earlier settlements, the total amount of cryptocurrency available for distribution to creditors was raised by almost $250 million.
Celsius stated in a court document that it will shut down on February 28 and stop using its web and mobile applications. Creditor payouts will be made via Coinbase, PayPal, and Venmo, with some creditors posting a claims form to X. Members of the special board that guided Celsius through bankruptcy, David Barse and Alan Carr, stated:
“Everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time,”
After the price of its native token, Celsius (CEL), crashed in 2022, the company stated at the time that it was pausing withdrawals to better position itself to honor its withdrawal obligations in the future.
Celsius’s bankruptcy resulted in settlements with the Department of Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the United States Federal Trade Commission, totaling $4.7 billion in fines.
Federal prosecutors detained Alex Mashinsky, the company’s former CEO, and accused him of financial fraud, pricing manipulation, and deceiving Celsius consumers. Mashinsky is free on a $40 million bond while he awaits his September trial after entering a not-guilty plea.
