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Celsius

Celsius Unveils Revival Strategy Backed By $450M Seed Funding

Ronaldo Marquez
by Ronaldo Marquez
2 years ago
·
Posted in Crypto News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

Celsius Network has commenced its bankruptcy trial as it seeks to relaunch itself as a user-owned Bitcoin miner. During a New York bankruptcy hearing, the company informed a judge that it intends to repay customers whose funds have been frozen on the platform since June 2022 with a portion of what they are owed by the end of the year.

According to a Bloomberg report, Celsius’s lawyer, Christopher S. Koenig, revealed that the restructured company, expected to emerge from Chapter 11, will receive $450 million in capital and financial backing. 

A consortium called Fahrenheit LLC, led by Arrington Capital has been selected to manage the mining business and provide the required financial support. Koenig emphasized Fahrenheit’s belief in Celsius’s business: “They are putting their money where their mouth is.”

Celsius Seeks Redemption Through Chapter 11 Revival

Judge Martin Glenn is deliberating the approval of Celsius’s plan despite opposition from some customers who have been unable to access their funds. 

Additionally, an affiliate of Lantern Ventures owed approximately $82 million, is challenging the plan because Celsius’s advisors have overvalued the new business. The new venture will also need clearance from securities regulators.

Related Reading: ETH Futures ETF Debut – How Did The 1st Day Play Out?

If approved, the plan would mark the first instance of a failed crypto platform being revived under Chapter 11 after a series of insolvencies rocked the industry last year. 

However, in the event of the new company’s failure, the company may face liquidation, potentially resulting in lower repayments for customers.

Per the report, Celsius intends to partially repay creditors by distributing around $2 billion in Ethereum (ETH) and Bitcoin (BTC) and offering stock in the new company. 

Customers will also receive a stake in litigation against co-founder and former CEO Alex Mashinsky and other former executives charged with fraud by federal prosecutors. Mashinsky, who has pleaded not guilty, stepped down after the company filed for bankruptcy.

Founder Blames Stablecoin Crash For Celsius’ Demise

Celsius halted customer withdrawals in June 2022 amid a downturn in cryptocurrency prices and subsequently filed for Chapter 11 the following month. The company’s bankruptcy was part of a wave that affected other crypto platforms, including Three Arrows Capital, BlockFi, and FTX.

Federal prosecutors charged Mashinsky with wire fraud and other crimes in July, alleging that he made misleading statements to attract customers to lend on the platform. Mashinsky was also accused of manipulating the price of CEL, Celsius’s native token, and profiting approximately $42 million from its sale.

Mashinsky attributes Celsius’s failure to external market forces beyond his control, such as the crash of stablecoins Luna and TerraUSD in May 2022 and unexpected mass withdrawals by Celsius customers. 

An independent examiner’s review of the company’s collapse revealed that Celsius had been utilizing customer assets to fund its operational expenses since 2020.

Related Reading: XRPL’s Capability To Handle 293+ Million Transactions Daily Can Make XRP A Global Utility Asset

Chris Ferraro, interim CEO, is scheduled to testify in support of the bankruptcy plan on Tuesday. The trial outcome will determine Celsius Network’s future and shed light on the potential revival of failed crypto platforms under Chapter 11.

Celsius
CEL’s sideways price action on the daily chart. Source: CELUSDT on TradingView.com

Featured image from Shutterstock, chart from TradingView.com

Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ronaldo Marquez

Ronaldo Marquez

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Ronaldo is a seasoned crypto enthusiast with over four years of experience in the field. He is passionate about exploring the vast and dynamic world of decentralized finance (DeFi) and its practical applications for achieving economic sovereignty. Ronaldo is constantly seeking to expand his knowledge and expertise in the DeFi space, as he believes it holds tremendous potential for transforming the traditional financial landscape.

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