Celsius creditors vote for restructuring plan

98% of Celsius creditors affected by the bankruptcy backed the restructuring plan of the crypto-lending platform, under which they will recover part of their assets and receive a stake in the new company.

Under the proposal, the debtors will allocate Bitcoin and Ethereum worth $2 billion. Celsius will also form a new public company called NewCo and transfer its shares to creditors.

The adoption of the initiative marks the final stage of the platform’s bankruptcy process. Under the plan, customers can expect to recover 67-85% of their funds.

“NewCo will oversee Bitcoin mining operations (which Celsius previously ran), participate in Ethereum-staking, monetize other illiquid debtor assets and develop new, more profitable and regulatorily compliant business opportunities,” the statement said.

The management of the new firm has been entrusted to the Fahrenheit Group consortium. In May, the organization became the winner of the bid for the assets of the bankrupt crypto-lending platform.

Fahrenheit was formed by venture firms Arrington Capital and Proof Group, the mining company US Bitcoin Corp, and individual investors, including former Algorand CEO Stephen Kokinos and Ravi Kaza.

Under the five-year agreement Fahrenheit will total $20 million in annual compensation. US Bitcoin will receive $15 million for managing the mining business.

The company will gain control of 121,800 ASIC miners. Once the devices are connected to the network, the firm’s total hash rate will reach roughly 12.2 EH/s.

Interim Celsius chief executive Chris Ferraro said the company remains focused on “delivering the best outcomes” for all participants and returning assets “as quickly as possible.”

In June 2022 Celsius paused withdrawals, exchanges and transfers between accounts due to extreme market conditions.

After filing for bankruptcy, the firm reported a $1.2 billion hole in its balance sheet. In August it emerged that the company’s liabilities exceeded its assets by $2.85 billion.

In September the platform’s head Alex Mashinsky left the post of CEO. In early 2023 the New York Attorney General charged him with deceiving investors by billions of dollars.

On July 13, the U.S. Department of Justice filed seven criminal charges against the former Celsius chief. They include securities fraud, manipulation of the CEL token price and misleading investors.

Subsequently the U.S. Federal Trade Commission announced a settlement of claims against the company. The agreement calls for the platform to pay $4.7 billion.