A struggling crypto lending platform, Celsius Network, seeks court approval to implement a restructuring plan to pay its customers and creditors by the end of 2023. Fahrenheit LLC sponsored ‘NewCo’ will focus on mining and staking.
NewCo will be seeded with up to $450 million in crypto and will be listed on NASDAQ to increase liquidity. With an estimated $50 million investment from Fahrenheit LLC, NewCo intends to repay customer funds by the end of the year.
Celsius has plans to use $2.03 bln worth of Bitcoin, Ethereum, and NewCo shares to partially pay off its debtors. The court is reviewing the plan, which awaits regulatory clearance. There are certain creditors who agree to it, while others do not.
If granted, this is likely to be one of the first resuscitations of a failed crypto platform in 2022 via Chapter 11 bankruptcy. In June 2022, Celsius stopped withdrawals due to problems in the Terra ecosystem.
The success of repayment is dependent on court and regulatory approval, despite opposition from some customers. If Celsius failed, this would be followed by its liquidation, resulting in the creditor receiving fewer credits.
The company has had some financial difficulties and regulatory challenges, including SEC lawsuits against the company and its former CEO over fraud allegations. The consequences of these developments for the crypto industry and its investors are major.
Also Read: Celsius Creditors Favor Reorganization Plan With 98% Vote
