Celsius Initiates $3bn Crypto Distribution to Creditors

Celsius, the former crypto lending provider, has completed Chapter 11 bankruptcy processes and begun a groundbreaking plan to distribute $3 billion in cryptocurrency and fiat assets among its creditors.

Celsius Restructuring Journey and $3B Crypto Distribution

A crash in the cryptocurrency market and many investors leaving the company in June 2022 made things very difficult for the company. In July 2022, Celsius filed for bankruptcy. At that time, the team admitted that its balance sheet had a loss of $1.2 billion and a substantial liability of $4.7 billion.

The Bankruptcy Court in New York approved the restructuring plan in late 2023, showing Celsius and its creditors how to move forward. As part of this plan, creditors will receive over $3 billion in cash and cryptocurrencies via the MiningCo Transaction. That is an integral step to keep the crypto lender from going bankrupt.

Crucial to the reform plan is creating a new company called Ionic Digital, Inc., whose only purpose is to mine Bitcoin. While an unusual approach, it guarantees ongoing payments to Celsius’s creditors, who will now “own” Ionic Digital. It has been hinted that Hut 8 Corp oversees this new company’s mining activities.

Alex Mashinsky, the Celsius founder, is being charged with fraud after the company went bankrupt. He denies being guilty and maintains his innocence. The story of Celsius has become a critical focal point in the history of cryptocurrency.

The restructured company cannot accept payments or give out loans in cryptocurrency anymore, which differentiates it from how it did business before. Creditors of Celsius will have power and influence over the new mining-focused business, although many details have yet to be worked out.

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