Bankrupt crypto lender Celsius Network has revealed that the company planning on switching to a Bitcoin mining-only company, following its bankruptcy court’s confirmation of the plan.
Celsius Transition To Mining NewCo
Celsius Network‘s transition into a mining company coincides with its bankruptcy proceedings. Over the past year, the digital assets company has experienced financial challenges, which led to its bankruptcy filing.
In September, Celsius filed for a reimbursement plan as its bankruptcy plan to resolve the financial challenges in the company. This saw over 95% of Celsius’ creditors voting in favor of this reimbursement plan.
According to the recent court filing, the cryptocurrency company intends to convert its services into Bitcoin mining operations exclusively and the new company will be known as Mining NewCo.
In addition, the company seems to have forsaken its initial plan for the company’s future with Fahrenheit Group. The firm asserted that the transition was the primary business of the new company to be formed with Fahrenheit, LLC.
This was the core business of the new company that was proposed to be created with Fahrenheit, LLC that was described in the Plan (the “Fahrenheit NewCo”).
The new company which was supposed to be known as Fahrenheit NewCo was formed after it purchased Celsius this year after it purchased Celsius in a bidding war.
Celsius and the Fahrenheit Group initially came to a deal that the group would provide the firm with funds and operational expertise. Fahrenheit successfully acquired the firm’s assets this year.
In the meantime, the firm is in touch with certain parties in order to organize the management of the Bitcoin mining company.
The SEC’s Imparted The Transition Move
The firm’s plan to switch to a Bitcoin mining company was triggered by the United States Securities and Exchange Commission’s (SEC) feedback after the court confirmed its plan. The company also highlighted that the new mining company will be owned by its customers.
The filing stated:
Celsius received feedback from the Securities and Exchange Commission (the “SEC”) on certain aspects of the Plan, which has resulted in Celsius now intending to begin the process to apply to register the shares in a new publicly traded Bitcoin mining company that will be owned by Celsius customers (the “Mining NewCo”).
Additionally, the feedback seems to have also imparted the initial plan of transferring the firm’s assets to the Fahrenheit Group. As noted in the filing, Celsius estates will retain certain of the assets in order to be monetized by the plan administrator.
However, based on the SEC’s feedback, the Debtors, in consultation with the Official Committee of Unsecured Creditors (the “Committee”), have determined that certain of the assets that were to be transferred to the Fahrenheit NewCo must, for regulatory reasons, be retained by Celsius’s estates to be administered and monetized by the Plan Administrator and/or Litigation Administrator for the benefit of creditors.