Cryptocurrency lending platform Celsius, once valued at $3 billion, has been approved by the court to transform into a new publicly traded Bitcoin mining company called “Mining NewCo.” The initial capital for Mining NewCo is $225 million, and the company will be owned by Celsius customers. However, the new company must achieve a total hash rate of 23 EH/s within three years. Furthermore, this court decision will not affect the lawsuit filed against Celsius by the U.S. Securities and Exchange Commission (SEC).
(Previous summary: Celsius is about to return “20.3 billion BTC ETH” to its users! The app will be closed within 90 days, and PayPal will handle the U.S. payment flow.)
(Background information: Celsius officially filed for voluntary restructuring with the bankruptcy court! Clearing Compound debt to recover nearly $200 million worth of WBTC.)
Table of Contents:
Expected repayment early next year
Details of Mining NewCo operations
Celsius will be closed
Celsius Network, a cryptocurrency lending platform once valued at $3 billion, abruptly suspended user withdrawals, conversions, and transfers last year in July and subsequently filed for Chapter 11 bankruptcy restructuring with the U.S. court. Celsius claimed that this move was to maximize the interests of all stakeholders.
Celsius’ restructuring plan has been ongoing, and at the end of November this year, Celsius modified its restructuring plan to focus on Bitcoin mining. The plan involves launching a new publicly traded Bitcoin mining company called “Mining NewCo,” which will be owned by Celsius customers.
Just yesterday (29th), Chief Judge Martin Glenn, who presided over the case, approved the “MiningCo transaction” proposed by Celsius and its related debtors. The court’s decision paves the way for Celsius to proceed with the transaction by establishing a “publicly traded company focused on Bitcoin mining” to stabilize and reorganize its operations. The specific terms and conditions of the MiningCo transaction include the establishment of a new company, Mining NewCo, with an initial capital of $225 million and the transfer of specific mining assets to Mining NewCo, excluding Core Rhodium, Mawson, and Luxor assets.
Celsius officially announced this news on X and stated that after Celsius emerges from bankruptcy (expected to occur in early 2024), it will increase the distribution of cryptocurrencies to creditors. Celsius customers will own shares of Mining NewCo, which will be managed by the cryptocurrency mining company US Bitcoin Corp (USBTC).
In addition, it was mentioned that eligible creditors who are expected to receive any distributions under this plan will receive an email with further explanations in the coming weeks.
According to court documents, the court approved modifications to the management agreement, setting an initial term of four years with conditions for extension or early termination. If Mining NewCo fails to achieve the specified total hash rate target of 23 EH/s within the first three years, Mining NewCo has the right to terminate the agreement after a six-month transition period without paying an early termination fee.
Furthermore, Celsius’ restructuring plan implementation organization, Fahrenheit Holdings (consisting of Arrington Capital and U.S. Bitcoin Corp), has also agreed to purchase $50 million worth of shares of Mining NewCo and publicly list these shares so that Celsius customers can sell their shares and recover more losses.
The court also approved the “phased termination of budgets and procedures,” which is crucial for the orderly execution of the plan. The phased budget reduction outlines significant expenses, including management fees, professional fees, and operational expenses, totaling approximately $70 million. These costs will support the distribution of asset sales and the management of the estate.
As a result of this ruling, the previous agreement regarding the treatment of unsecured claims is now null and void. The court has formulated new guidelines for winding up the company’s operations and managing payments to creditors.
It is worth noting that this court ruling will not affect the lawsuit filed against Celsius by the U.S. Securities and Exchange Commission (SEC). The order states that it should not be interpreted as a determination of federal securities law regarding cryptocurrencies or related transactions. This provision preserves the SEC’s power to question transactions involving cryptocurrencies, and the court retains exclusive jurisdiction over matters arising from or related to the execution of this order.
Further reading:
Refusing to plead guilty! Celsius founder Alex Mashinsky denies 7 criminal charges and posts $40 million bail.
Related news
Refusing to plead guilty! Celsius founder Alex Mashinsky denies 7 criminal charges and posts $40 million bail.
Celsius in trouble! Settles with the U.S. FTC for $4.7 billion, former CEO charged with fraud and misappropriation of customer assets.
Breaking news: Celsius former CEO Alex Mashinsky arrested! SEC, CFTC… regulatory agencies jointly file lawsuits.
Tags:
Celsius
Celsius Network
Mining NewCo
bankruptcy restructuring