In a significant development, creditors involved in the Celsius bankruptcy case have voted overwhelmingly in favor of a proposed plan that promises to return funds to them and allocate equity through a new company. According to a filing by bankruptcy firm Stretto on September 25, most creditor classes voted in favor of the plan by a staggering majority of over 98%.
While this near-unanimous decision marks a significant step forward, the plan is still pending final approval at a confirmation hearing scheduled for October 2 in the United States Bankruptcy Court for the Southern District of New York.
As outlined in a disclosure statement filed on August 17, the current plan outlines the redistribution of approximately $2 billion worth of Bitcoin (BTC) and Ether (ETH) to creditors of the Celsius Network. Additionally, the plan calls for the distribution of equity in a new entity temporarily named “NewCo.”
NewCo is poised to take over and expand the Debtors’ Bitcoin mining operations, stake Ethereum, monetize other illiquid assets held by the Debtors, and explore new, value-enhancing, and regulatory-compliant business opportunities, as stated in the plan.
Notably, management of the new entity, NewCo, will fall under the purview of the Fahrenheit Group, a consortium comprising crypto-native individuals and organizations. The consortium includes notable figures such as former Algorand CEO Steven Kokinos, venture capital firm Arrington Capital, crypto miner US Bitcoin Corp, Proof Group Capital Management, and Arrington Capital adviser Ravi Kaza.
Celsius Network, which was once a prominent player in the crypto lending space, faced the brunt of the 2022 bear market and ultimately filed for bankruptcy on July 14, 2022. Just a day before, on July 13, 2023, the U.S. Securities and Exchange Commission (SEC) had filed a lawsuit against Celsius and its former CEO, Alex Mashinsky. The SEC alleged that Celsius had raised billions of dollars through unregistered and fraudulent offers involving “crypto asset securities.” Mashinsky, facing these allegations, was arrested on the same day by the U.S. Department of Justice, which charged him with fraudulent financial activities, misleading investors, and several related charges.
