- A judge will allow Celsius to pay out CEL tokens and reopen as a mining business as it enters a recovery phase.
According to Bloomberg, the failed crypto lending firm Celsius Network has been cleared to exit bankruptcy and also enters its recovery phase.
The report stated that the company received approval in bankruptcy court to turn its business into a creditor-owned Bitcoin (BTC) mining enterprise.
The corporation would also pay users whose account balances were previously locked. These consumers would be given bitcoin as well as stock in the new company. Celsius anticipates beginning distribution of the assets in early 2024.
The settlement will distribute Celsius’ CEL token with a value of $0.25, according to court filings. Earlier in the dispute, numerous consumers and creditors objected to a CEL distribution due to the token’s decreased value. However, Celsius and its unsecured creditors committee, on the other hand, argued for this strategy, and U.S. Bankruptcy Judge Martin Glenn eventually ruled that a distribution using the CEL token is acceptable.
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Though the proposal has been accepted by the bankruptcy court, it must also be approved by the Securities and Exchange Commission (SEC) in the United States. Otherwise, Celsius may be forced to liquidate its assets. Judge Glenn has requested that the SEC issue a decision as soon as possible.
Celsius Is Under Extensive Regulatory Action
Celsius ceased withdrawals and declared bankruptcy in mid-2022, amid a bigger liquidity problem among crypto lending companies.
Though the bankruptcy trial is already concluded, the company’s problems are far from over. In July 2023, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) initiated concurrent lawsuits against Celsius and its former CEO, Alex Mashinsky. At the same time, the company signed an agreement with the Federal Trade Commission (FTC) that permanently barred it from handling consumer assets.
Mashinsky was charged with multiple fraud-related crimes by the US Department of Justice in July 2023. According to current reports, Mashinsky’s criminal trial will take place in September 2024, after the DOJ submitted its accusations in July 2023.
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