A judge in the U.S. gave Celsius Network the green light to change its direction from its original bankruptcy plan to mining Bitcoin. The judge believed this shift wouldn’t harm creditors or customers and could actually be a better move considering the circumstances.
Celsius, a crypto lender, faced some obstacles with its original plan after getting into Chapter 11 bankruptcy protection in July 2022, a trend seen among various crypto lenders due to the industry’s rapid growth during the pandemic.
Their initial plan to make money by validating crypto transactions got rejected by the SEC. So, Celsius decided to switch gears and focus on Bitcoin mining instead. This change also meant partnering with a mining company, US Bitcoin Corp, sidelining other bidders who were part of the original plan.
Some creditors and the U.S. Department of Justice’s bankruptcy watchdog weren’t thrilled with this big change, arguing that it should have gone through another vote. Initially, the judge agreed that the mining plan was different from what the creditors had approved, but eventually, the judge allowed the change without a new vote.
Celsius’ temporary CEO, Chris Ferraro, called it a significant win for the creditors and emphasized their commitment to distributing cryptocurrency promptly. They plan to exit bankruptcy by early 2024.
This altered bankruptcy plan also freed up $225 million in cryptocurrency assets that were intended for the rejected business lines. This means more crypto will be returned to Celsius’ customers, along with equity shares in the new bitcoin mining venture, as outlined by Judge Glenn.
