Cryptocurrency company Celsius Network has begun a $3 billion payout in an approved plan to exit bankruptcy.
In November 2023, a New York Judge approved Celsius to form a restructuring plan to repay customer assets.
The reorganisation plan has been approved by the Securities and Exchange Commission (SEC) and Official Committee of Unsecured Creditors (UCC), facilitating crypto, fiat, and common stocks to be given to Celsius creditors through a new bitcoin mining firm Ionic Digital. Hut 8, a mining company, will oversee Ionic Digital’s operations for the next four years under a management agreement.
David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, explained: “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. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues.
“Among other achievements, Celsius secured the cryptocurrency on our platform, achieved a settlement with the preferred shareholders, ran a successful auction of the one reorganisable operating business to begin as a new Bitcoin mining company, established a litigation trust to pursue the innumerable counterparties that exploited Celsius and, possibly most importantly, settled with the DOJ, SEC, and CFTC. But most of all, we are proud of the preservation and distribution of cryptocurrency assets and enhanced recovery for customers and claim holders.”
Celsius is working under the eye of federal and state regulators to ensure the distributions are made in a secure and timely manner during its restructuring period. Celsius has begun processes to shut down its mobile and web applications.
Chief commercial officer of Hut 8, Matt Prusak, has been announced as CEO of Ionic Digital and will join the majority UCC-appointed Board of Directors.
In July 2022, Celsius filed for bankruptcy, shortly after it was revealed that a former executive cashed out $21 million. CEO of Celsius Alex Mashinsky was sued by New York’s attorney general and arrested for fraud, and has plead not guilty. His trial is scheduled for September this year.