Amid the Celsius bankruptcy plan in which creditors are to decide the next step, creditors of the crypto lender have voted in favor of a reimbursement plan – a vote that involves the sale of Celsius assets to a consortium.
Creditors Decide Next Steps For The Crypto Firm
On Monday, September 25, 2023, creditors of the crypto firm voted in favor of a reimbursement plan as its bankruptcy plan. The reimbursement plan will enable creditors to get back their funds and equity through a newly formed company called “NewCo.”
However, the reimbursement plan is now in the hands of the United States Bankruptcy Court for the Southern District of New York and it is yet to be completed. The plan’s final approval will be made at a confirmation hearing set for October 2, 2023.
The hearing will also determine the redistribution of approximately $2 billion worth of Celsius crypto assets to the firm’s creditors.
According to the Disclosure Statement, the newly formed entity NewCo will be controlled by The Fahrenheit Group, a consortium of crypto-native individuals and organizations.
Celsius entered an agreement with the Fahrenheit Group for the firm to become a plan sponsor to provide Celsius with funding and operational expertise. The group successfully took possession of Celsius assets this year.
The statement also noted that NewCo aims to build out the debtor’s Bitcoin (BTC) mining operations, Ethereum (ETH) staking, monetization of debtor’s other liquid assets, and the development of new, value-accretive, and regulatory-compliant business opportunities.
Allegations Against Celsius And Former CEO
Bankruptcy has not been the only challenge the crypto firm has faced this year as several allegations were raised against the crypto firm and its CEO Alex Mashinsky in 2023.
For starters, the US Securities and Exchange Commission (SEC) filed a lawsuit against the company and its former CEO for fraudulent acts and manipulation of the price of Celsius tokens (CEL) on July 13, 2023.
The company and Mashinky also faced separate lawsuits from other regulatory bodies including the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC).
The CFTC filed a complaint against Mashinsky and Celsius for engaging in a scheme to defraud hundreds of thousands of customers by mispresenting the safety and profitability of its digital asset-based finance platform.
The FTC also filed a complaint against the company for violation of the Federal Trade Commission Act in connection with the marketing and sale of cryptocurrency lending and custody services.
Mashinsky was then arrested in New York in July 2023, amid an ongoing investigation into Celsius’ collapse. Mashinsky and Celsius Chief of Revenue Officer Roni Cohen-Pavon were charged for years of misleading customers on the market value of the company’s value, and interest in CEL.
However, Mashinsky pleaded not guilty and he was released from custody on a $40 million bond but his banking and real estate assets have been ordered to be frozen by the court.
CEL token at $0.13 | Source: CELUSDC on Tradingview.com
Featured image from Cryptopolitan, chart from Tradingview.com