Creditors to receive $3 billion as Celsius concludes bankruptcy, paving way for new Bitcoin mining venture, Ionic Digital Inc.
After a challenging period of financial distress, Celsius Network has successfully navigated through bankruptcy and is now set to distribute over $3 billion in cryptocurrency and fiat currency to its creditors. This significant move marks a new chapter for the company and its stakeholders, who have been awaiting resolution since the firm's financial troubles became public.
The journey through bankruptcy for Celsius Network was not a swift one, lasting approximately 18 months. However, it concluded with an overwhelming 98% approval from the creditors, signaling a strong consensus for the path forward. The process was complex, involving settlements with major U.S. regulatory bodies such as the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).
As part of the restructuring plan, creditors are not only receiving a portion of the $3 billion but are also being granted a stake in Ionic Digital Inc., a new Bitcoin mining operation. This venture is expected to go public and is being managed by Hut 8, a leader in the cryptocurrency mining space, with Matt Prusak at the helm as the leader of the new company. Ionic Digital Inc. is poised to continue delivering recoveries to the creditors while also aiming for growth and profitability in the burgeoning crypto mining industry.
In an effort to maximize the value returned to creditors, Celsius has increased the amount of cryptocurrency available for distribution by converting various altcoins to more stable and widely accepted cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH), adding an additional $250 million to the pool. This strategic move is part of the company's broader plan to wind down its operations and discontinue its mobile and web applications, signaling the end of an era for the once-popular crypto lending platform.
The company's former CEO, Alex Mashinsky, who resigned amidst the financial turmoil and was later arrested on fraud charges, has denied allegations of manipulating the price of Celsius's native CEL token. His assets have been frozen, and he is set to stand trial in September 2024. This ongoing legal battle remains a significant footnote in the company's history as it moves forward from bankruptcy.