Cryptocurrency company Celsius Network has initiated a $3 billion payout as part of an approved plan to exit bankruptcy.
In November 2023, a New York Judge approved Celsius’s restructuring plan to repay customer assets. The plan has been sanctioned by the Securities and Exchange Commission (SEC) and the Official Committee of Unsecured Creditors (UCC), allowing the distribution of cryptocurrency, fiat, and common stocks to Celsius creditors through a newly established bitcoin mining firm, Ionic Digital. Hut 8, a mining company, will manage Ionic Digital’s operations for the next four years under a management agreement.
David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, explained: “When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing for bankruptcy around that time. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues.”
They highlighted several achievements, including securing cryptocurrency on their platform, settling with preferred shareholders, successfully auctioning off the reorganizable operating business to initiate a new Bitcoin mining company, establishing a litigation trust to pursue numerous counterparties that exploited Celsius, and reaching settlements with the DOJ, SEC, and CFTC. They expressed pride in the preservation and distribution of cryptocurrency assets, aiming to enhance recovery for customers and claim holders.
Celsius is collaborating with federal and state regulators to ensure that distributions are made securely and in a timely manner during its restructuring phase. The company has also begun the process of shutting down its mobile and web applications.
Matt Prusak, the Chief Commercial Officer of Hut 8, has been appointed as CEO of Ionic Digital and will join the majority UCC-appointed Board of Directors.
In July 2022, Celsius filed for bankruptcy shortly after it was revealed that a former executive cashed out $21 million. CEO Alex Mashinsky was sued by New York’s attorney general and arrested on fraud charges, to which he has pleaded not guilty. His trial is scheduled for September this year.