Celsius Creditor Repayment Of $2 Billion Worth Of Crypto Approved By Court

Key Points:

• Celsius creditor repayment of $2 billion worth of Bitcoin and Ethereum will be starting next year.
• Despite facing fraud allegations, Celsius plans to transform into a creditor-owned Bitcoin mining firm.
• Former CEO Alex Mashinsky has been accused of manipulating the CEL token, but has pleaded not guilty.

The court has approved Celsius creditor repayment of $2 billion worth of Bitcoin and Ethereum. The failed crypto lender aims to repay frozen accounts through a creditor-owned Bitcoin mining firm. The distribution is expected to begin early next year.

According to BBG, the failed crypto lender, which went bankrupt last year, has won enough creditor support to transform into a creditor-owned Bitcoin mining firm. The plan involves repaying customers whose accounts have been frozen for over a year through a combination of cryptoassets and stock in the new publicly listed Bitcoin mining company.

Former Celsius CEO Alex Mashinsky has been accused of manipulating the firm’s native CEL token and making misleading statements to attract customer investments. However, Mashinsky has pleaded not guilty.

While the plan to transform into a crypto miner has faced skepticism and regulatory hurdles, Celsius still needs approval from the US Securities and Exchange Commission. If the crypto mining proposal falls through, Celsius may have to pivot to liquidation.

Celsius Creditor Repayment Will Start Next Year

Judge Martin Glenn, who approved Celsius’ plan, has urged the SEC to expedite its decision on whether to approve Celsius’ emergence from Chapter 11 as a publicly listed Bitcoin mining firm.

The court ruling followed a trial where customers expressed frustration with the bankruptcy plan and questioned the company’s new management team. Some customers argued that the plan undervalues Celsius’ CEL token, which will be used to distribute digital assets and stock to creditors.

Celsius’ bankruptcy lawyers argued that the CEL token was essentially worthless when the company filed for Chapter 11 bankruptcy, stating that it served as a proxy for company stock. The bankruptcy plan helped avoid a ruling on whether CEL constitutes a security, which has broader implications for the regulation of the crypto industry in the US.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.