Celsius Network has obtained approval from a New York judge for a restructuring plan that aims to repay customer assets through a new entity owned by Celsius creditors and managed by Fahrenheit.
US Bankruptcy Judge Martin Glenn signed off on the restructuring on Thursday. Fahrenheit plans to transition the business to repay customers using bitcoin mining and earning “staking” fees through the validation of blockchain transactions, according to Reuters.
Celsius Network filed for bankruptcy last July after freezing customer accounts the month prior. It was revealed that former executives had cashed out $21 million before the bankruptcy. Additionally, former CEO Alex Mashinsky was sued by New York’s attorney general and arrested on fraud charges, although he has pleaded not guilty. His trial is scheduled for September 2024.
Fahrenheit won the bid to manage the new company in May. The new entity will be funded by $450 million in crypto held by Celsius and a $50 million investment from Fahrenheit.
Despite the approval from Judge Glenn, reports indicate that the Securities and Exchange Commission (SEC) will also need to approve the plan and the proposed listing of the new company. Furthermore, the SEC will have the opportunity to challenge any crypto asset transactions they consider to involve securities.