In a significant development, the Celsius bankruptcy plan has received approval, paving the way for customers to reclaim a portion of their funds and acquire shares in the restructured entity, named NewCo.
Judge Martin Glenn from the Southern District of New York Bankruptcy Court officially confirmed the approval on November 9. The plan, overwhelmingly supported by Celsius creditors on September 27, outlines the redistribution of approximately $2 billion in Bitcoin and Ether to Celsius creditors, along with equity in the revamped NewCo. The company anticipates initiating creditor reimbursements by the year’s end.
A notable segment of Celsius creditors participated in the Earn program, enabling them to earn weekly rewards by holding CEL tokens that were locked for a year. Judge Glenn’s decision clarified that the court’s confirmation doesn’t constitute a determination regarding the securities status of CEL Token or the Earn Program under any securities laws. This contrasts with the stance of the United States Securities and Exchange Commission (SEC), which considers similar programs as securities.
NewCo, the reorganized entity, is set to enhance former crypto lender Celsius’s mining operations and monetize illiquid assets, contingent on regulatory approval. The Fahrenheit consortium, comprising various crypto-native entities, will manage NewCo. Notably, Proof Group, a consortium member, is reportedly vying for FTX.
The backdrop to this approval involves Celsius filing for bankruptcy in July 2022. The former CEO, Alex Mashinsky, faces charges of securities fraud, commodities fraud, and wire fraud, with his trial scheduled for September 2024. He remains free on a $40 million bail. Additionally, the former Chief Revenue Officer, Roni Cohen-Pavon, has pleaded guilty to fraud and price manipulation charges, awaiting sentencing on December 11. The approval of the bankruptcy plan marks a crucial step toward resolution for Celsius and its stakeholders.
