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Cryptocurrency lending platform Celsius Network may require new approval from creditors for a transition to a Bitcoin mining venture, which was suggested by a US bankruptcy judge during a recent court session, as part of its future plans. The company shared details of its plan to focus solely on Bitcoin mining when it emerged from bankruptcy on November 30, reflecting a process guided by legal regulators.
Celsius Team’s Noteworthy Move
According to a report, Judge Martin Glenn, responsible for Celsius Network’s Chapter 11 proceedings, expressed dissatisfaction with the sudden change on November 30 and reiterated his advice to the Celsius team on the importance of reaching an agreement with the SEC multiple times.
Judge Glenn pointed out that the company’s proposed shift into the Bitcoin mining business in the future significantly deviates from the agreement creditors initially voted on and could potentially face significant backlash from them.
Celsius recently announced that it had scaled down its post-bankruptcy strategy to focus on Bitcoin mining due to skepticism from the US Securities and Exchange Commission officials regarding the company’s business plans. The SEC did not directly oppose Celsius’s bankruptcy plan but expressed reluctance to approve the company’s crypto lending and staking activities, which had not been previously approved by the agency.
What Happened on November 30?
Celsius’s lawyer Chris Koenig claimed during the hearing on November 30 that the court-approved bankruptcy plan provided the company with the flexibility to transition to a mining-focused business. According to Koenig, the deal was equally beneficial for creditors, so a new vote was not necessary.
Two clients acting without legal representation expressed opposition to the agreement in court documents and argued that Celsius should instead be completely liquidated.
Celsius filed for Chapter 11 protection in July 2022 after the rapid growth of the sector during the COVID-19 pandemic, as one of several crypto lending platforms that went bankrupt. According to the updated Celsius plan summarized by Koenig, crypto assets worth $225 million controlled by a consortium known as Fahrenheit will be returned to the team.
- Celsius Network’s shift to Bitcoin mining raises concerns.
- Creditors may need to approve the new mining focus.
- The SEC shows reluctance towards Celsius’s plan.
