Celsius Network allowed to shift to bitcoin mining

U.S. Bankruptcy Judge Martin Glenn on Wednesday said the bankruptcy plan approved in November contained enough flexibility to let Celsius switch to a backup plan after it hit a road block with the U.S. SEC

A U.S. bankruptcy judge has approved crypto currency lender Celsius Network’s pivot to bitcoin mining, ruling that the firm could diverge from a previously approved bankruptcy plan because creditors and customers were no worse off under the new restructuring.

U.S. Bankruptcy Judge Martin Glenn in Manhattan on Wednesday said the bankruptcy plan approved in November contained enough flexibility to let Celsius switch to a backup plan after it hit a road block with the U.S. SEC.

Celsius filed for Chapter 11 protection in July 2022, one of several crypto lenders to go bankrupt after the rapid growth of the industry during the pandemic.

Celsius had scaled back broader ambitions to earn fees from validating crypto transactions and start new lines of business after the Securities and Exchange Commission rejected that plan.

The switch also meant that Celsius would part ways with some of the outside bidders that were selected to manage the new firm, leaving mining firm US Bitcoin Corp squarely in charge of running the new, creditor-owned mining business.

US Bitcoin Corp, founded by Hut 8’s Asher Genoot, was originally going to manage Celsius besides other firms in a consortium of bidders which included Arrington Capital and was collectively called “Fahrenheit.”

Some creditors, as well as the U.S. DoJ’s bankruptcy watchdog, contended that the change was significant enough that Celsius should have to put the proposal up for a new vote by creditors.

Glenn was initially sympathetic to that argument, saying during a November 30 court hearing that the mining plan was “not the deal that the creditors voted on.” But Glenn finally approved the deal without requiring a new vote.

This is a significant day for Celsius creditors and our focus on quickly distributing crypto currency continues to guide us, Celsius’ interim CEO, Chris Ferraro, said on Thursday.

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