Crypto lender Celsius has successfully navigated bankruptcy proceedings and is now looking to return more than $3 billion in crypto and fiat to its creditors. This primary objective comes as it also launches a new Bitcoin mining company.
Following the announcement of its Chapter 11 bankruptcy filing over 18 months ago, Celsius has now confirmed the formation of its Bitcoin mining firm, Ionic Digital. Managed by Hut 8 and directed by Hut 8’s Chief Commercial Officer, Matt Prusak, Ionic Digital will maintain its focus on delivering recoveries to creditors. The anticipation is that Ionic Digital stocks will become publicly tradable once the necessary approvals come through.
Celsius is set to distribute over $3 billion in cryptocurrency and fiat to creditors, settling claims with key stakeholder groups and establishing the previously announced MiningCo transaction. This significant step marks the creation of the newly minted Bitcoin mining firm, Ionic Digital, Inc.
The confirmation of Celsius’s bankruptcy exit plan was met with approval from creditors. This course of action follows the lockdown of withdrawals in June 2022, leading to the subsequent bankruptcy filing a month later. Celsius also augmented the available crypto for distribution to creditors by approximately $250 million. This increase came through the conversion of alternative cryptocurrencies to BTC or ETH and in settlements.
The once-prominent crypto lender plans to wind down its operations and halt its mobile and web applications as of February 28. All creditors’ distributions will be facilitated through Paypal, Venmo, and Coinbase.
Observers once speculated that Celsius would vanish, mirroring the fate of other bankrupt crypto lenders. But Celsius’s successful navigation through bankruptcy has been dubbed an “extraordinary team effort” by David Barse and Alan Carr, who comprise the special board guiding the firm through these challenging times.
When Celsius initially halted withdrawals, it was justified as a move to strategically place it in a “better position to honor withdrawal obligations over time” following the severe drop in its native token, Celsius (CEL). Its bankruptcy hearing resulted in $4.7 billion settlements with the US Federal Trade Commission, Department of Justice, Securities and Exchange Commission, and the Commodity Futures Trading Commission. Celsius’s former CEO, Alex Mashinsky, is facing charges of financial fraud, CEL price manipulation, and misleading Celsius customers. His trial is set for September.