Celsius Network Initiates $3 Billion Payout as it Emerges from Chapter 11 Bankruptcy
The distribution of assets and the establishment of Ionic Digital are seen as significant steps in Celsius' efforts to address its financial challenges and regulatory issues.
Celsius Network has completed its Chapter 11 restructuring, distributing over $3 billion in cryptocurrency and fiat to creditors. The plan includes the creation of a new Bitcoin mining company, Ionic Digital, managed by Hut 8 Corp.
Celsius Network, a cryptocurrency platform, announced the successful conclusion of its Chapter 11 bankruptcy process, marking the completion of its plan of reorganization. The plan, approved by approximately 98% of the company's account holders and confirmed by the Bankruptcy Court for the Southern District of New York in November 2023, involved distributing over $3 billion in cryptocurrency and fiat to Celsius' creditors.
Celsius Network declared bankruptcy in July 2022, citing a $1.2 billion gap in its balance sheet. The recent development follows a series of legal challenges, including lawsuits from regulators such as the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), and the Commodity Futures Trading Commission (CFTC). Former CEO Alex Mashinsky, who co-founded Celsius, also faces charges of fraud.
As part of the reorganization, a new Bitcoin mining company, Ionic Digital, Inc., was created, owned by Celsius' creditors. Hut 8 Corp. will manage the mining operations of Ionic Digital. The company plans to take Ionic Digital public once it receives the necessary approvals. This marks the end of an 18-month process for Celsius, which faced challenges and regulatory investigations. The company will now start winding down its operations, discontinuing its mobile and web applications.
The MiningCo Transaction, approved on December 27, 2023, initiated the distribution of over $3 billion in liquid cryptocurrency and fiat to creditors. Ionic Digital's stock, held by Celsius' creditors, will be publicly traded upon approval.
Chris Ferraro, Plan Administrator and former Chief Restructuring Officer, Interim Chief Executive Officer, and Chief Financial Officer, expressed the company's commitment to maximizing value for creditors. The restructuring process involved securing cryptocurrency assets, settling with preferred shareholders, conducting a successful auction to establish Ionic Digital, and resolving legal matters with regulatory bodies.
The completion of the Chapter 11 process is seen as a significant milestone for Celsius Network, showcasing its ability to navigate complex legal, regulatory, and business challenges and deliver value to stakeholders.
