Celsius Network’s Strategic Shift to Bitcoin Mining Approved by Court

Court’s Approval of Celsius Network’s New Direction

Celsius Network, a cryptocurrency lender, has received approval from a U.S. bankruptcy judge to alter its business model and focus on bitcoin mining. This decision allows Celsius to diverge from its previously approved bankruptcy plan, with the judge citing that the new restructuring direction would not leave creditors and customers in a worse position.

U.S. Bankruptcy Judge’s Ruling

Judge Martin Glenn of Manhattan acknowledged the flexibility of the bankruptcy plan approved in November, which permits Celsius to adopt a backup plan after facing obstacles from the U.S. Securities and Exchange Commission (SEC). This pivot came as part of the proceedings following Celsius’s Chapter 11 filing in July 2022, amidst a wave of crypto lender bankruptcies during the post-pandemic industry boom.

Celsius’s Revised Ambitions

Following the SEC’s rejection of its initial plan, which involved earning fees from validating crypto transactions and launching new business ventures, Celsius scaled back its ambitions. This change in strategy also means a departure from the previous consortium of bidders, leaving US Bitcoin Corp, led by Asher Genoot of Hut 8, to run the new creditor-owned mining operation.

Debates Over the Plan’s Modification

Despite some creditors and the U.S. Department of Justice’s bankruptcy watchdog arguing that the substantial change warranted a re-vote, Judge Glenn eventually sanctioned the deal without a fresh round of creditor voting, even after expressing concerns that the mining plan diverged significantly from the original agreement.

Implications for Creditors

Celsius’ interim CEO, Chris Ferraro, hailed the court’s decision as a significant milestone, emphasizing the company’s commitment to promptly distributing cryptocurrency assets to creditors. With the revised bankruptcy plan, $225 million in crypto assets initially allocated for the defunct business ventures will now be redirected to customers. Furthermore, customers will gain equity in the new bitcoin mining enterprise as part of their compensation.

Looking Ahead

Celsius is poised to exit bankruptcy in early 2024, with its focus now on the lucrative bitcoin mining sector. This move represents a strategic adaptation to regulatory challenges and market conditions, aiming to realign the company’s resources for a sustainable future.