Officially, the valuation as of the end of May is correct and Celsius will pay creditors $2 billion in Bitcoin and Ether tokens.
A mathematician working for Celsius Network’s valuation advisor Stout Risius Ross LLC has confirmed that the fair value of some debtors’ assets and liabilities as of May 31, 2023, is correct.
Joel E. Cohen, in a declaration at the New York bankruptcy court, detailed the methods used to analyze the valuation and arrive at the conclusion. Cohen noted in the declaration:
“Based on my work performed and the information and methodologies considered, I believe the Valuation Report accurately reflects the fair value of certain of the Debtors’ assets and liabilities as of May 31, 2023.”
The results of a vote from Celsius creditors came in on Monday in agreement with a plan for them to receive about $2 billion worth of Bitcoin (BTC) and Ether (ETH). According to a Celsius Network post on X (formerly Twitter), more than 95% of the company’s creditors across eligible classes voted for the fund returns in support of Celsius Network’s Chapter 11 bankruptcy proceedings.
In addition to the $2 billion payment, the bankruptcy efforts feature a plan to share equity in a new company temporarily named “NewCo.” According to an August disclosure statement:
“NewCo will operate and further build out the Debtors’ Bitcoin mining operations, stake Ethereum, monetize the Debtors’ other illiquid assets, and develop new, value-accretive, regulatory-compliant business opportunities.”
Crypto consortium Fahrenheit Group will manage NewCo. The consortium comprises several organizations and individuals, including venture capital company Arrington Capital and Steven Kokinos, the former CEO of Algorand. Others include Arrington Capital adviser Ravi Kaza, and cryptocurrency miner US Bitcoin Corp.
Celsius Network Valuation and Debt
Celsius Network, with more than $20 billion worth of assets under management at one point, suffered problems caused by the crypto bear market in 2022. The company eventually filed for Chapter 11 Bankruptcy in July, with CEO Alex Mashinsky calling it “the right decision for our community and company.” The company had suspended withdrawals the month before.
Celsius initially disclosed debt of about $1.2 billion in the bankruptcy filing. However, a Coin Report stated that the debt could be around $2.85 billion. According to the report, the company’s net liabilities was $6.6 billion, while its total assets under management was $2.85 billion. Contrarily, Celsius filed that it had $4.3 billion in assets under management and $5.5 billion in liabilities.
SEC and CFTC Action
The case became shrouded in some controversy when news spread that CEO Mashinsky withdrew $10 million worth of crypto before Celsius Network suspended withdrawals. There were also a few allegations that Mashinsky was unjustly interfering in trading calls.
Court documents later revealed that Mashinsky, CTO Nuke Goldstein, and CSO Daniel Leon withdrew $56.12 million between May and June before the company suspended withdrawals. These funds were from custody accounts and comprised BTC, ETH, USDC, and CEL.
In July, the United States Securities and Exchange Commission (SEC) filed a lawsuit against Mashinsky and Celsius, accusing them of securities fraud. Mashinsky was arrested after the Commodity Futures Trading Commission (CFTC) found Mashinsky guilty of breaking several US regulations.
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