The cryptocurrency lending platform Celsius, which was once valued at $3 billion, has received court approval to transform into a new publicly listed Bitcoin mining company called “Mining NewCo.” With an initial capital of $225 million, the company will be owned by Celsius customers, but the new company must achieve a total hash rate of 23 EH/s within three years. Furthermore, this court ruling will not affect the lawsuit filed against Celsius by the U.S. Securities and Exchange Commission (SEC).
(Previous summary: Celsius is about to repay its users “20.3 billion BTC and ETH”! The app will be closed within 90 days, and American payment service PayPal will handle it.)
(Background: Celsius officially files for “voluntary reorganization” with the bankruptcy court! It repays Compound’s debt and recovers nearly 200 million pounds worth of WBTC.)
Table of Contents
Expected Repayment in Early Next Year
Details of Mining NewCo Operations
Closure of Celsius
Celsius, a cryptocurrency lending platform that was once valued at $3 billion, unexpectedly suspended user withdrawals, conversions, and transfers. In July last year, it filed for Chapter 11 bankruptcy reorganization in a U.S. court, claiming that it was to maximize the interests of all stakeholders.
Celsius’ reorganization plan has been ongoing, and at the end of November this year, Celsius modified the reorganization plan to focus on Bitcoin mining. It planned to launch a new publicly listed Bitcoin mining company called “Mining NewCo” and started the stock registration process. This new company would be owned by Celsius customers.
Just yesterday (29th), Chief Judge Martin Glenn, who presided over this 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, stabilizing and reorganizing the company’s operations by establishing a “publicly listed company focused on Bitcoin mining.” The specific terms and conditions of the MiningCo transaction include the establishment of a new company called Mining NewCo with an investment of $225 million and the transfer of certain mining assets to Mining NewCo, excluding Core Rhodium, Mawson, and Luxor assets.
Celsius also made this announcement public on X and stated that after Celsius emerges from bankruptcy (expected in early 2024), it will increase the distribution of cryptocurrencies to creditors. Celsius customers will own stocks in Mining NewCo, which will be managed by the cryptocurrency mining company US Bitcoin Corp (USBTC).
In addition, the official mentioned that qualified creditors who are eligible for any distribution under this plan are expected to 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 provisions 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 without paying an early termination fee after a six-month transition period.
Furthermore, the Celsius reorganization plan’s implementing organization, Fahrenheit Holdings (composed of Arrington Capital and U.S. Bitcoin Corp), has also agreed to purchase $50 million worth of Mining NewCo’s equity 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 reduction of budgets 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 legacies.
As a result of this ruling, previous agreements regarding the handling of unsecured claims are now void. The court has established new guidelines for winding up the company’s operations and managing creditor payments.
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 cryptocurrency or related transactions. This provision preserves the SEC’s authority 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, posting bail of $40 million.
Related News
Refusing to plead guilty! Celsius founder Alex Mashinsky denies 7 criminal charges, posting bail of $40 million.
Celsius is in trouble! Settles with the U.S. FTC for $4.7 billion, former CEO accused of fraud and misappropriation of client assets.
Breaking News: Celsius former CEO Alex Mashinsky arrested! SEC, CFTC… joint lawsuit.
Tags:
Celsius
Celsius Network
Mining NewCo
bankruptcy reorganization