Key Takeaways
- Judge Martin Glenn approved the Celsius bankruptcy exit plan, allowing the distribution of $2 billion in crypto assets to creditors.
- NewCo, managed by the Fahrenheit consortium, will focus on expanding mining operations and monetizing Celsius's assets.
- The Celsius saga involves legal challenges, including the arrest of its former CEO, Alex Mashinsky, and the guilty plea of its former chief revenue officer, Roni Cohen-Pavon.
Judge Martin Glenn of the Southern District of New York Bankruptcy Court confirmed the approval of the Celsius bankruptcy exit plan.
The plan, overwhelmingly approved by Celsius creditors on September 27th, paves the way for the distribution of approximately $2 billion in Bitcoin (BTC) and Ether (ETH) to the creditors. Additionally, they will receive equity in a newly reorganized entity, NewCo.
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The bankruptcy plan's confirmation, issued on November 9th, marks a crucial step towards resolving the financial turmoil Celsius and its stakeholders face.
The plan aims to reimburse creditors, many of whom participated in Celsius's Earn program. This program offered weekly rewards for holding CEL tokens locked for a year.
In the decision, Judge Glenn emphasized that the court's confirmation of the bankruptcy plan does not constitute a judgment on whether the CEL Token or the Earn Program are considered securities.
Nothing in this Confirmation Order or the Plan constitutes a finding of the Court under any securities laws or otherwise as to whether CEL Token or the Earn Program are securities.
NewCo, under the management of the Fahrenheit consortium, will focus on expanding Celsius' mining operations. This includes monetizing illiquid assets of the former crypto lender and engaging in developmental activities.
The backstory of Celsius's bankruptcy, declared in July 2022, involves significant legal challenges. Its former CEO, Alex Mashinsky, was arrested in July 2023 over securities fraud, commodities fraud, and wire fraud charges. Awaiting trial in September 2024, Mashinsky is currently out on a $40 million bail.
Additionally, former chief revenue officer Roni Cohen-Pavon pleaded guilty to fraud and price manipulation charges, with sentencing scheduled for December 11th.
The bankruptcy exit plan represents a turning point for Celsius and its creditors. The distribution of significant crypto assets and equity in NewCo offers a glimpse of recovery and restructuring in the volatile world of cryptocurrency lending and mining.
