- Celsius Network redefines its future in the crypto industry by transitioning to a mining-only company, following challenges from the SEC.
The crypto industry is seeing increasing scrutiny, partly due to several high-profile bankruptcies last year. One is that of Celsius Network, a giant crypto lender that went bankrupt in July 2022.
Amid its ongoing bankruptcy proceedings, Celsius has filed a plan to restart its exchange but with a different focus. Most recently, under pressure from the U.S. Securities and Exchange Commission (SEC), the former lender announced that the reorganized company would focus solely on Bitcoin mining.
Celsius Shift From Crypto Lending to Bitcoin Mining
In a late-night court filing, Celsius Network delineated its updated bankruptcy plan, unveiling a transition to focus solely on Bitcoin mining. This strategic shift emerged in response to the SEC’s pressure on the company’s reorganization plan, which initially included staking and mining.
Under the new plan, Celsius will form a new entity, referred to as “Mining NewCo.” This company, earmarked for public trading, will be dedicated to Bitcoin mining and owned by Celsius customers.
The company’s reorganization is in the hands of Fahrenheit Holdings—a consortium including Arrington Capital and U.S. Bitcoin Corp. The anticipated timeline for creditor distributions remains set for early 2024.
Read Also: Celsius Network Turns To Bitcoin Mining to Resolve Bankruptcy and Repay Customers
The Celsius Bankruptcy Case
Celsius Network’s bankruptcy case is a complex web of financial restructuring and legal challenges. To give creditors a path to recovery, the court decided to list Celsius on the Nasdaq and entrust its management to Fahrenheit LLC.
Moreover, in early November, the parties agreed that Celsius would return about $2 billion in cryptocurrency to account holders, a significant step towards resolving creditor claims.
Alex Mashinsky, the disgraced founder and former CEO of Celsius Network, faces several lawsuits in the US. A civil case in New York alleges that he defrauded investors by misrepresenting Celsius as a safe alternative to banks. It also alleges that he concealed the company’s significant investment losses.
Read Also: Celsius Changes Name to NewCo, Creditors to Get Shares and $2B in Crypto
In addition to the criminal charges and the New York Attorney General’s lawsuit, Mashinsky faces civil lawsuits by the SEC, the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Federal Trade Commission.
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