The settlement not only involves substantial cash payouts but also includes an equity share in the freshly established Ionic Digital Inc., a mining enterprise, as detailed in the company’s recent statement on Wednesday.
This resolution comes after an extensive 18-month period in bankruptcy court, during which approximately 98% of Celsius Network’s creditors consented to the proposed plan. Looking forward, Ionic Digital Inc. is poised to make its debut on the public market, pending the completion of regulatory clearances.
David Barse and Alan Carr, members of the special board committee that led the bankruptcy stated :
“When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time.”
In a comprehensive turnaround, Celsius has successfully safeguarded its cryptocurrency assets, forged a consensus with creditors, and executed a strategic reorganization of its viable business segments. The firm has also resolved legal entanglements with key U.S. regulatory bodies, including the Department of Justice, Securities and Exchange Commission, and Commodity Futures Trading Commission.
In a strategic leadership appointment, Matt Prusak, the Chief Commercial Officer of Hut 8—the entity overseeing Ionic’s mining operations—has ascended to the role of CEO of Ionic.
In a related development outlined in a separate statement , the firm disclosed that PayPal and Coinbase are entrusted with the distribution of cryptocurrencies. It was also clarified that Celsius will cease any distributions through its mobile or web applications, marking their shutdown around February 28.
The closure of Celsius’s bankruptcy was further marked by a significant $4.7 billion settlement with U.S. authorities concerning fraud charges. The saga extended to former CEO Alex Mashinsky, who stepped down in September 2022 and was subsequently arrested on allegations of manipulating the price of the lender’s CEL token—charges he has contested.
Following his arrest, Mashinsky was released on a $40 million bond, with a court mandate freezing his banking and real estate holdings. His trial is set for September 2024, a critical juncture in this high-stakes financial and legal narrative.
In a recent landmark decision, Celsius Network secured court endorsement to transition into a novel Bitcoin mining entity. The embattled crypto lender is set to collaborate with US Bitcoin to establish MiningCo, aiming to capitalize on the surging Bitcoin market.
As per the approved arrangement, Celsius customers are poised to hold shares in Mining NewCo, which will be under the stewardship of U.S. Data Mining Group, Inc. Following the court’s nod, stakeholders anticipating reimbursements in light of the approved plan are expected to receive notification emails shortly.
Judge Glenn sanctioned the strategic shift to MiningCo, affirming its alignment with the stipulations of Celsius’ ratified reorganization blueprint. This move ushers in enhanced financial returns for creditors, surpassing initial projections.
Celsius has highlighted the advantageous terms proposed by US Bitcoin, including a substantial $225 million investment aimed at bolstering mining capabilities. With bitcoin’s valuation experiencing a significant uptick, more than doubling since May, Celsius’ legal team contends that the pivot to mining operations presents creditors with a more lucrative recovery prospect than initially envisioned.