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With its bankruptcy in 2022 shaking the crypto market, the crypto lending company Celsius Network made a significant announcement regarding the process following its Chapter 11 bankruptcy filing. The company stated that, 18 months after halting user withdrawals, the Chapter 11 bankruptcy filing has been officially resolved, and the distribution of $3 billion worth of cryptocurrency and fiat money to creditors has begun.
A Bitcoin Mining Company to Be Established for Some Creditors
According to the announcement, as part of Celsius Network’s approved restructuring plan, a portion of the $3 billion will be allocated to establish a new Bitcoin (BTC) mining company called Ionic Digital.
Celsius Network creditors will become owners of the mining company through common shares, expected to be offered to the public after the company receives the necessary approvals. The Miami-based mining company Hut 8 will oversee Ionic’s mining operations under a four-year management agreement.
With the transition, Celsius Network plans to shut down its mobile and web applications, gradually ceasing operations completely.
The Bankruptcy and Aftermath of Celsius Network
As known, Celsius Network declared bankruptcy on July 13, 2022, after a $1.2 billion gap emerged in its balance sheet. The bankruptcy of such a large and significant company had shaken the crypto market at the time. There were fears that companies indirectly connected to Celsius Network would also go bankrupt.
Last year, Celsius Network and its founder and former CEO Alex Mashinsky were sued by various regulators, including the U.S. Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Commodity Futures Trading Commission (CFTC), on allegations of misleading customers. Mashinsky was also charged with fraud. The trial is expected to begin in September of this year.
