Celsius Network concludes 18-month bankruptcy process and begins distribution to creditors. A new company, Ionic Digital, provides partial ownership and mining operations of Bitcoin to Celsius creditors. More than $3 billion in cryptocurrency and fiat distributed to Celsius creditors as part of the reorganization plan.
Defunct cryptocurrency lending platform Celsius Network has declared that it has “emerged” from bankruptcy by completing payments required under its confirmed reorganization plan.
The process, which has lasted 18 months, began after the platform filed for bankruptcy in July 2022.
Creditors voted in favor of a plan that provides for the return of more than $2 billion in crypto assets to clients. According to court documents in the Celsius case, 95% of the US company’s creditors approved the reorganization plan created by the company’s bankruptcy team.
For it to be implemented, a judge’s approval is required. It will be at a hearing in the Bankruptcy Court of the Southern District of New York where the authority allows the return of user funds. According to Celsius, confirmation hearings on this case began on Monday, October 2, 2023.
Celsius Network Will Begin Distribution to Creditors
A recent statement outlined the distribution of more than $3 billion to the cryptocurrency lending platform’s creditors. Additionally, the announcement included the launch of a new company, in which Celsius creditors will have partial ownership.
“The Plan includes the distribution of more than $3 billion in cryptocurrency and fiat to Celsius’ creditors, and the creation of a new Bitcoin mining company – Ionic Digital, Inc. – that will be owned by Celsius’ creditors and whose “Mining operations will be managed by Hut 8 Corp.”
The statement notes that the proceeds from the Bitcoin mining company will be used to repay outstanding payments to creditors. In its initial bankruptcy filing, Celsius owed more than $4.7 billion to more than 100,000 creditors:
“Ionic Digital was created as a new Bitcoin mining company that will continue to deliver recoveries to creditors. The Ionic Digital stock is expected to be publicly traded once the requisite approvals are received.”
Celsius Network: Speculation on a Possible Second Distribution
This meets the expected deadline that had been set, which required all Celsius account holders with more than $100,000 in liabilities to settle before January 31. Most recently, the price of the Celsius Network token, CEL, stands at just $0.17.
During a Spaces event at X, crypto influencers Tiffany Fong and Louis Origny got into a debate over the possibility of a second distribution.
Origny holds the belief that a second distribution is unlikely. However, it emphasizes Celsius’ claims against Alameda Research and Three Arrows Capital (3AC) as potential sources of additional distributions.
However, Origny highlights a discrepancy of $800 million. This is due to an additional liability of $700 million, and he argues that there are no footnotes or clarifications about the origin of this amount.
What Does the Celsius Plan Establish?
Celsius’s reorganization plan, presented as a “quick and viable path” to exit bankruptcy and ensure the greatest possible recovery of funds for clients, contemplates the creation of a new cryptocurrency company.
The company will be called NewCo and will be controlled by Fahrenheit Group, a consulting firm. The cryptocurrency firm “will be customer-owned and focused on Bitcoin mining and Ethereum staking,” Celsius’ plan says.
The plan details that this new company, through which Celsius client funds would be distributed, will receive up to USD 450 million in cryptocurrencies for its development.
By Audy Castaneda
