Embattled Crypto Lender Celsius Plans to Repay Customers by Year-End
Key Takeaways: Celsius Network, an embattled crypto lender, is seeking court approval to start repaying its customers by the end of the year. A new company called NewCo, which is set to emerge from the reorganization plan, will be seeded with up to $450 million in crypto.
Celsius Seeks to Start Repaying Customers Soon
Celsius Network, a crypto lender currently undergoing legal restructuring, is looking to begin repaying its customers by the end of the year. During a recent court hearing for its reorganization plan, the company informed the judge of its intention to repay customers in a timely manner.
#Celsius will distribute at least $2.03B of crypto to Creditors.Meanwhile, NewCo will be seeded with up to $450 million in crypto.
— Celsius NewCo Community (@CelsiusNewCo) October 2, 2023
Celsius’ legal counsel, Christopher Koenig, disclosed during the hearing that the new company, NewCo, is poised to obtain seed funding of $450 million. The plan is for Celsius to repay its creditors partially by distributing $2.03 billion worth of Bitcoin and Ethereum, as well as shares of the newly formed NewCo.
The establishment of NewCo has garnered support from a consortium called Fahrenheit LLC, which will oversee the company’s mining and staking operations.
Currently, Judge Martin Glenn is reviewing the proposed restructuring plan. However, regulatory approval from securities regulators in the US is also required for the plan to proceed.
While the reorganization plan has been approved by the majority of creditors, there are dissenting voices. According to Celsius, “The Debtors arrive at Confirmation with a Plan that has the support of over 95% of voting Account Holders by both number and dollar amount.”
Celsius Could Soon Resurface After Bankruptcy Filing
Celsius declared bankruptcy over a year ago and has since faced scrutiny from security regulators. In July, the US Federal Trade Commission fined Celsius Network $4.7 billion for mismanaging billions in user deposits.
Celsius Network’s founder, Alex Mashinsky, is currently facing fraud charges filed against him by the US Department of Justice.
If the proposed plan is approved, Celsius would become one of the first failed crypto platforms to be resurrected after filing for Chapter 11 bankruptcy in the previous year.
Since the collapse of the Terra/Luna project in June 2022, Celsius has suspended withdrawals, leaving investors waiting for access to their funds.
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