Creditors involved in the Celsius bankruptcy case have voted in favor of a plan that aims to return their funds and distribute equity in a new entity.
The plan received overwhelming support from the majority of the creditors, with over 98 percent voting in favor, as reported in a filing by bankruptcy firm Stretto on September 25. Despite this near-unanimous approval, the plan still requires final confirmation at a hearing scheduled for October 2 in the U.S. Bankruptcy Court for the Southern District of New York.
Under the current proposal, approximately $2 billion worth of Bitcoin and Ethereum will be allocated to Celsius Network creditors. Additionally, equity in a new company tentatively named "NewCo" will be distributed. This new entity will be tasked with managing Celsius' Bitcoin mining operations, collateralizing Ethereum, monetizing other illiquid assets, and developing new, regulatory-compliant business ventures, as stated in an August 17 disclosure statement.
Notably, Fahrenheit Group, a consortium consisting of crypto-native individuals and organizations, will oversee the operations of NewCo. This group includes former Algorand CEO Steven Kokinos, venture capital firm Arrington Capital, crypto miners US Bitcoin Corp, Proof Ravi Kaza, an advisor to Group Capital Management, and Arrington Capital.
Celsius Network faced significant challenges in the 2022 bear market, ultimately leading to the cryptocurrency lender filing for bankruptcy on July 14, 2022. The situation escalated when, on July 13, 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Celsius and its former CEO Alex Mashinsky. The SEC accused them of conducting unregistered and fraudulent offerings involving "crypto-asset securities" that raised billions of dollars. Mashinsky was arrested on the same day, facing charges related to fraudulent financial activities and misleading investors, among others.
