Cryptocurrency lender Celsius has successfully emerged from Chapter 11 bankruptcy protection, revealing plans to distribute approximately $3 billion in crypto and fiat currencies to creditors. Alongside this, Celsius is launching a new Bitcoin mining company named Ionic Digital, managed by Hut 8 and led by Hut 8 Chief Commercial Officer Matt Prusak. The mining company will actively pursue recovery from creditors, with its shares expected to become publicly traded, subject to necessary approvals.
According to Celsius, about 98% of its creditors supported the bankruptcy exit plan, proposed over 18 months ago. This plan was put forward after Celsius suspended withdrawals in June 2022 and filed for bankruptcy a month later. Ionic Digital aims to continue recovery efforts, and the increased availability of cryptocurrency for distribution to creditors is attributed to the conversion of altcoins into Bitcoin or Ethereum, along with previous settlements.
Celsius outlined the upcoming steps, indicating that it will cease operations and discontinue mobile and web applications by February 28. Creditors will receive distributions through platforms such as PayPal, Venmo, and Coinbase. The company faced skepticism during its bankruptcy process, and some creditors expressed surprise at Celsius's successful emergence. Members of the special committee guiding Celsius through bankruptcy emphasized the achievement as the result of an extraordinary team effort.
Celsius had initially suspended withdrawals, stating that it aimed to manage withdrawal obligations more effectively over time, particularly after a significant decline in the price of its native token, Celsius (CEL), in 2022. The bankruptcy process was marked by challenges, including a $4.7 billion fine from the FTC, along with settlements with the Justice Department, Securities and Exchange Commission, and Commodity Futures Trading Commission. Former CEO Alex Mashinsky faced federal charges related to financial fraud, CEL price fixing, and misleading Celsius customers. Mashinsky has pleaded not guilty and is held on $40 million bail, awaiting trial scheduled for September.
