The company is no longer interested in a crypto lending revival
Celsius Network was recently approved for a second exit path from bankruptcy. The cryptocurrency company has decided against a deal with the Fahrenheit consortium in exchange for becoming a Bitcoin mining company.
Court documents from December 27 show that Judge Martin Glenn consented to move ahead with a second option earlier endorsed by Celsius’ creditors, involving the creation of a public enterprise committed exclusively to Bitcoin mining rather than multiple business lines controlled by the Fahrenheit consortium.
The transition came after the US Securities and Exchange Commission (SEC) declined to give the relief required to execute the first alternative in the exit strategy, the creation of NewCo. The initial plan would have had NewCo expand Celsius’ current mining functions and business activities and would be managed by the Fahrenheit consortium, which includes various crypto-native individuals and associations, such as Arrington Capital, Proof Group and Hut 8.
“As it has turned out, the SEC denied relief required to implement the NewCo Transaction. For that reason, the Debtors, with the Committee’s support, have switched to the second path approved by creditors: the Orderly Wind Down,” reads the manuscript.
The new plan would pay creditors a portion of their recovery in shares of the impending Bitcoin mining company. It also opens up $225 million in crypto assets originally planned to subsidize the new businesses rejected by the SEC.
Reuters reported that many creditors and the US Department of Justice’s bankruptcy watchdog argued that Celsius should be required to put the proposal to a new vote. However, Judge Gleen specified that the recent restructuring plan would not negatively affect creditors.
Celsius joined several other crypto lenders that filed for bankruptcy in 2022. Former CEO Alex Mashinsky was arrested in July 2023 and charged with securities, commodities and wire fraud.
