Celsius Network, a cryptocurrency lending platform, might need to secure a fresh vote from creditors for its planned shift to a Bitcoin mining venture, as a U.S. bankruptcy judge suggested in a recent court session.
The crypto lender provided details on Thursday, Nov 30, of its plan to only mine Bitcoin when it emerges from bankruptcy, a scaled-down business that reflects guidance from regulators.
According to a report, Judge Martin Glenn, responsible for Celsius Network’s Chapter 11 proceedings, voiced displeasure on Thursday, Nov 30, regarding the abrupt change, emphasizing his repeated advisories to Celsius about the importance of reaching an agreement with the SEC.
Judge Glenn reportedly highlighted that the proposed transformation into a Bitcoin mining business deviates significantly from the deal creditors initially voted on, potentially encountering considerable resistance from creditors.
Celsius recently announced a scaled-back post-bankruptcy strategy, narrowing its focus to Bitcoin mining due to the U.S. Securities and Exchange Commission’s skepticism about its original business plans. While the SEC didn’t outright object to Celsius’ bankruptcy plan, the company stated that the agency was reluctant to endorse crypto lending and staking, activities it had previously disapproved of.
Celsius attorney Chris Koenig reportedly contended during Thursday’s hearing that the court-approved bankruptcy plan allowed the company the flexibility to shift to a mining-exclusive business. According to Koenig, a new vote isn’t necessary as the revised deal is equally beneficial for creditors.
As per the report, two customers, proceeding without legal representation, expressed dissent toward the agreement in the court documents, contending that Celsius should undergo complete liquidation instead.
Related: Celsius grants access to withdrawals for eligible crypto holders
Celsius filed for Chapter 11 protection in July 2022, one of several crypto lenders to go bankrupt following the industry’s rapid growth during the COVID-19 pandemic. The updated Celsius plan releases $225 million in cryptocurrency assets from the control of external investors, known as the Fahrenheit consortium, as outlined by Koenig.
Under the new proposal, Celsius creditors are projected to receive a 67% recovery, surpassing the 61.2% under the previous Fahrenheit arrangement, according to court records. During the preceding bid, the post-bankruptcy Bitcoin mining venture for Celsius will be overseen by U.S. Bitcoin Corp, a participant in the consortium alongside Arrington Capital.
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