Celsius Network has received court approval to transform itself into a Bitcoin mining company, owned by its creditors, as part of a comprehensive strategy to repay account holders whose funds have been inaccessible for over a year.
The effort to establish a new cryptocurrency services enterprise using the remains of the bankrupt Celsius lender is facing obstacles with the US Securities and Exchange Commission (SEC), as per an insider.
Ongoing discussions and exchanges of information related to the assets held by the Celsius estate are occurring among the SEC, the Celsius Creditors Committee, and Fahrenheit. The latter, an investment entity that emerged victorious in a bidding competition in May, aims to issue shares for a new crypto business built on the remaining assets of the bankrupt lender. Speaking to CoinDesk, the source said:
“My understanding is that the SEC asked for more information to make a determination. The way I’m interpreting it is the SEC is telling the committee what they want to see for various parts of the business, and now the committee has to decide what they’re going to do with that information.”
Fahrenheit, comprising Arrington Capital, US Bitcoin Corp., and Proof Group, secured approval for its reorganization strategy from a bankruptcy court earlier this month. The plan, currently on hold, also envisioned the allocation of approximately $2 billion in Bitcoin (BTC) and Ethereum’s ether (ETH) to creditors, along with equity in a new company.
This new entity would oversee and expand Celsius’ Bitcoin mining operations, stake Ethereum, monetize other less liquid assets, and explore new business avenues, as detailed in a filing. If this plan encounters obstacles, the approved contingency further involves winding down and liquidating Celsius’ assets. As of now, neither Fahrenheit nor the Celsius Creditor Committee has responded to requests for comments, and the SEC has declined to comment.
Celsius’ Move into Bitcoin Mining
Celsius Network has received court approval to transform itself into a Bitcoin mining company, owned by its creditors, as part of a comprehensive strategy to repay account holders whose funds have been inaccessible for over a year.
The approval, granted by the US Bankruptcy Court in the Southern District of New York, marks a pivotal moment for the platform, signaling its potential exit from bankruptcy. Also, the asset distribution is likely to commence by early next year.
However, the proposed shift to Bitcoin mining has faced skepticism from some customers, and regulatory challenges remain, requiring approval from the SEC. Celsius has acknowledged the need for regulatory clearance, stating that if the mining venture doesn’t proceed, an alternative plan for liquidation may be implemented.
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