Celsius to Become a Bitcoin Mining Company After Court Approval
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
A US bankruptcy court judge has approved bankrupt cryptocurrency lender Celsius Network to switch its operations from decentralized finance (DeFi) lending to Bitcoin mining.
With this approval, Celsius can switch from its original bankruptcy plan. The judge has now ruled that company restructuring changes will not affect creditors and customers.
US Bankruptcy Court Judge Approves Celsius Switch to a Bitcoin Miner
US Bankruptcy Judge Martin Glenn has now said that the bankruptcy plan approved allowed Celsius to have an alternative strategy by offering flexibility.
The US Securities and Exchange Commission (SEC) halted an initial plan by Celsius that involved earning fees through validating crypto transactions. It also prevented the troubled lender from releasing new business lines.
Celsius filed for Chapter 11 bankruptcy protection in July last year amid a series of bankruptcies within the crypto lending sector. It will now shift its operations towards Bitcoin mining activities.
With this shift, Celsius will let go of some early bidders set to manage the new company. The new mining operations will be under the management of US Bitcoin Corp. This shift will remove the need for many bidders who had initially sought a different path for the firm.
No Creditors Vote Is Involved
Before this decision, some Celsius creditors and the US Department of Justice argued that such changes needed a vote by the creditors. Judge Glenn had initially considered this plan, saying that a shift towards crypto mining differed from the original plan.
The judge later said that this transition did not require another vote by creditors and approved the deal. The interim CEO at Celsius, Chris Ferraro, told the court’s decision was significant for Celsius creditors and its focus on distributing cryptocurrencies.
This development comes as Celsius takes measures to allow some customers to withdraw their funds. Some users have reported challenges in logging in to the platform to process withdrawals despite the assurances by the lender.
Celsius has also launched a Custody Program allowing eligible users to withdraw funds from the platform.
The customers that fail to support this reorganization plan will not be part of this distribution. Instead, they will have their funds secured within a segregated wallet under the management of the Litigation Administrator within six months.
