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After a collapse last year, accusations of fraud and its founder being arrested, Celsius is set to restructure into a new company next year.
Celsius Network is set to reorganise its business after falling into a state of bankruptcy and fraud last year.
The company said it received bankruptcy court approval for its reorganisation plan that involves partial repayments to customers and the creation of a new company.
Celsius said this new company will be “well capitalised” and have no debt on emergence, with a $1.25bn balance sheet. This new company intends to use $450m of liquid cryptocurrency to earn “staking yields” on the Ethereum network and expects this to make between $10m and $20m a year.
The new company will be owned by Celsius creditors and be managed by Fahrenheit LLC, a group consisting of US Bitcoin Corp, Arrington Capital, Proof Group, Steven Kokinos and Ravi Kaza. This consortium will provide the capital, management team and technology to operate the new company, according to previous statements by the company.
“[More than] 95pc of voting creditors voted in favour of the plan, marking another significant milestone in Celsius’ ongoing efforts to maximise the distribution of assets to its customers,” the company said on X.
Celsius said it is working to implement this approved plan and expects to emerge from Chapter 11 bankruptcy in early 2024.
Founded in 2017, Celsius functioned in a similar way to a regular bank – except its assets were based on the promise of ‘high-yield’ crypto instead of fiat money. But its CEL token plummeted in value last year and by June 2022, Celsius paused all transactions – including withdrawals.
The company’s fall was controversial as the following month, a former investment manager for Celsius filed a lawsuit that accused the crypto lender of manipulating the market. This was the same month that Celsius filed for bankruptcy.
Earlier this year, Celsius founder and former CEO, Alex Mashinsky, was arrested and charged with fraud by two US regulators. Both the company and Mashinsky were charged with failing to register the sales of Celsius’s crypto lending product, making false and misleading statements to investors and engaging in market manipulation with its cryptocurrency.
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