- Celsius successfully exits Chapter 11 bankruptcy and begins creditor payouts.
- A new Bitcoin mining company was established, owned by Celsius’ creditors.
- Over $3 billion in cryptocurrency and fiat was distributed to creditors.
The catastrophic Celsius bankruptcy , which cost billions to its users, has finally concluded. After a lengthy bankruptcy, the failed crypto lender emerged from Chapter 11.
This breakthrough includes the distribution of substantial cryptocurrency and fiat assets to creditors. Moreover, Celsius set up a new creditor-owned Bitcoin mining company, Ionic Digital, Inc., which its creditors own.
Celsius Bankruptcy Nightmare Finally Over for Creditors
On Wednesday, January 31, Celsius Network LLC announced the successful conclusion of its Chapter 11 bankruptcy process. This announcement marked the culmination of an arduous journey that began 18 months earlier.
The overwhelming majority of the creditors voted for the restructuring plan, approved by the Bankruptcy Court for the Southern District of New York. The cornerstone of the plan was the distribution of over $3 billion in cryptocurrency and fiat to Celsius’ creditors.
What Does The Celsius Bankruptcy Mean for Creditors
Celsius Network’s creditors can anticipate a significant recovery of their assets as part of the approved bankruptcy plan . According to the plan, creditors are expected to receive between 67% and 85% of their holdings.
This outcome resulted from a restructuring plan that received overwhelming support from creditor groups, with more than 98% voting in favor.
Additionally, the reorganization plan heralded the birth of Ionic Digital, Inc., a new Bitcoin mining entity. This company, owned by the creditors of Celsius, will be managed by the mining company Hut 8.
Controversies Surrounding the Celsius Bankruptcy
Since its collapse, Celsius has been controversial, largely due to its former management. Notably, former Celsius Network CEO Alex Mashinsky is facing a range of serious criminal charges following the collapse of the crypto lending platform.
The charges include securities fraud, commodities fraud, and wire fraud. These allegations stem from accusations that Mashinsky defrauded customers and misrepresented key aspects of Celsius’s business, including its financial health and the safety of investments made through the platform.
The US Securities and Exchange Commission also accused the company of deceptive practices, including providing false assurances about the security of its platform and inflating user figures. The SEC’s charges include unregistered sale of crypto asset securities, making false statements, and market manipulation, with a proposal to bar Mashinsky from serving as an officer or director in a public company in the future.
On the Flipside
- The Celisus bankruptcy, together with the bankruptcy of the crypto exchange FTX, highlighted the dangers of trusting centralized entities with crypto.
- Former Celsius Network CEO Alex Mashinsky continues to maintain his innocence.
Why This Matters
The Celsius saga is a cautionary tale for investors, emphasizing vigilance and due diligence before investing in crypto platforms.
Read more about the Celsius bankruptcy plan:
Celsius Shifts to Bitcoin Mining-Only Under SEC Pressure
Read more about Solana’s Jupiter token airdrop:
Why Solana’s Jupiter Token Sank 70% Post Exchange Listings
