Celsius, Bankrupt Crypto Lender, Gains Approval for Asset Sale Amidst Market Disruption and Legal Woes
Crypto News – Bankrupt cryptocurrency lender Celsius is set to conduct a vote on its proposed asset sale to the Fahrenheit consortium. This follows the recent approval by a judge, confirming that creditors could potentially recover between 67% to 85% of their holdings.
This approval represents a significant milestone in Celsius’ year-long journey towards emerging from bankruptcy and facilitating the return of funds to its customers. This period has been characterized by substantial disruptions in the cryptocurrency markets and the arrest of former CEO Alex Mashinsky on charges of fraud, which he vehemently denies.
Acting as the company’s interim CEO, Chris Ferraro, stated via email, “Our unwavering focus is on achieving the best possible outcomes for our valued customers and creditors, expediting the process of value restoration.” This process operates under Chapter 11 provisions, initiated in July 2022 and overseen by Judge Martin Glenn of the New York Bankruptcy Court.
During the period from August 24 to September 22, creditors will be furnished with ballots to cast their votes on the proposed plan, involving the sale of assets to a consortium comprising Arrington Capital and miner U.S. Bitcoin Corp. Potential returns for creditors, which will primarily be conducted using Bitcoin (BTC) and Ethereum (ETH), could span from 67% for those holding Earn Accounts to 85.6% for participants in Celsius’ Borrow Program. This stands in contrast to a mere 47% return in the case of asset liquidation, as outlined in court filings.
Recent instances of crypto bankruptcy proceedings have demonstrated creditors’ substantial support for restructuring proposals. For instance, in the case of crypto lender Voyager, an overwhelming 97% of creditors favored a sale to Binance.US, although the prospective buyer subsequently withdrew due to legal complications.
In July, Alex Mashinsky faced legal action, being accused of securities fraud, commodities fraud, wire fraud, and conspiring to manipulate the value of Celsius’ native token, CEL. Multiple government agencies brought these charges against him. Celsius, however, was not subjected to prosecution, as it acknowledged its responsibilities, cooperated with authorities, and confirmed that the $4.7 billion fine imposed by the Federal Trade Commission would not hinder its plans to reimburse customers.