Celsius begins payment process of $3 billion to creditors

Embattled crypto lender Celsius has taken a major stride in resolving its bankruptcy proceedings by initiating a $3 billion payout to its creditors.

Initiation of Creditor Payments

In a recent development that offers a glimmer of hope to stakeholders, Celsius Network has announced the commencement of payment procedures, negotiating the distribution of assets valued at $3 billion. These assets include an array of cryptocurrencies and other financial instruments targeted to settle the claims of the platform’s creditors.

Restructuring and Reorganization

The payment process is part of a larger strategy to reorganize the once thriving crypto lender. The strategy encompasses the creation of Ionic Digital, Inc., a new bitcoin mining entity. Ownership of this new venture will be transferred to the creditors of Celsius, with Hut 8 Corp appointed to oversee the mining operations. This move signifies a pivot from Celsius’ previous business model, focusing on a future in crypto mining and staking.

Background of the Bankruptcy

Celsius’ financial woes became public in June 2022 when the crypto market experienced a severe downturn, leading to a mass withdrawal of deposits. Subsequently, in July, Celsius halted withdrawals and filed for bankruptcy. The company disclosed a deficit of $1.2 billion in its balance sheet, with total liabilities amounting to $4.7 billion. The collapse is regarded as one of the most significant in the history of the digital currency market.

Legal Developments and Future Outlook

The founder of Celsius, Alex Mashinsky, has faced charges of fraud amidst these tribulations, though he maintains his innocence. As 2023 drew to a close, the Bankruptcy Court in New York approved the reorganization plan of Celsius Network. The approved plan outlines the creation of a new company, dedicated solely to cryptocurrency mining and staking activities, with the express purpose of repaying Celsius’ debts. Notably, the new company will be restricted from accepting deposits or issuing crypto loans, unlike its predecessor.

The unfolding of Celsius’ payment process and restructuring efforts are closely monitored by the crypto community, as it may set a precedent for handling similar incidents in the future.