Cryptocurrency lending company Celsius has received court approval to implement its reorganization plan, which includes becoming a Bitcoin (BTC) mining company. The idea is to implement the plan at the beginning of 2024, as reported by the company.
This authorization marks Celsius’ official exit from bankruptcy, a process that began in July 2022. In addition to reorganizing its business, the company also reached a US$4.7 billion settlement with US authorities over allegations of fraud.
Former Celsius CEO Alex Mashinsky, who resigned from his position in September last year, was arrested on fraud charges. As CriptoFácil reported, the executive would have defrauded thousands of investors out of billions of dollars in cryptocurrencies.
Among other things, Mashinsky was accused of manipulating the price of the company’s native CEL token. However, he denied the allegations. Mashinsky paid bail of US$40 million and was released until his trial in September 2024.
Celsius restructuring plan
Still on the restructuring of Celsius, the Bankruptcy Court of the Southern District of New York approved the plan that the company presented at the end of September. According to the plan, approved by creditors, customers who had funds in Celsius will receive around $0.25 per CEL token.
Furthermore, the court ordered Celsius to hand over control of the company to Fahrenheit Holdings. It involves a winning bid to acquire the company in May 2023. Thus, as part of the agreement, a new company (NewCo) registered in Delaware will be created to mine Bitcoin.
“NewCo will have a balance sheet of US$1.25 billion,” the document said. “NewCo intends to stake some or all of these cryptocurrencies to earn staking yields on the Ethereum network, which would generate between $10 and $20 million per year.”
Celsius halted withdrawals and filed for bankruptcy in mid-2022 amid a broader liquidity crisis among crypto firms. In July 2023, the US Department of Justice filed several fraud-related criminal charges against Mashinsky. Meanwhile, the DOJ issued its indictments in July 2023.
The CEL token reacted positively to the latest news and jumped 4% in the last 24 hours, according to CoinGecko. At the time of writing this article, the crypto asset is costing US$0.24.