A bankruptcy judge in the United States has given the go-ahead for Celsius Network, a cryptocurrency lender, to switch its focus to Bitcoin mining. The judge said that the firm may depart from a bankruptcy plan that had been authorized in the past since the new reorganization would not hurt the company’s creditors or clients.
U.S. Bankruptcy Judge Martin Glenn stated on Wednesday in Manhattan that the bankruptcy plan authorized in November provided sufficient flexibility to enable Celsius to convert to a backup plan when it encountered a roadblock with the United States Securities and Exchange Commission.
As a result of the fast expansion of the cryptocurrency lending sector during the COVID-19 epidemic, Celsius was one of numerous cryptocurrency lenders who went bankrupt and sought protection under Chapter 11 in July 2022.
After the Securities and Exchange Commission (SEC) denied Celsius’s intention to generate fees from certifying cryptocurrency transactions and launch new business lines, Celsius cut back on its more expansive objectives.
The transition also meant that Celsius would cut ties with some outside bidders selected to oversee the new firm. This would leave the mining company, U.S. Bitcoin Corp., exclusively responsible for managing the new mining operation that creditors own.
In the beginning, U.S. Bitcoin Corp., which Asher Genoot of Hut 8 established, was supposed to operate Celsius in conjunction with other businesses that were part of a consortium of bidders that included Arrington Capital and was collectively referred to as “Fahrenheit.”
Some creditors and the bankruptcy inspector of the United States Department of Justice contended that the change was significant enough that Celsius ought to be required to put the plan up for a new vote by creditors.
In the beginning, Glenn seemed sympathetic to that position. During a court hearing on November 30, he stated that the mining proposal was “not the deal that the creditors voted on.” Glenn finally supported the proposal, which meant there was no need for a further vote.
Celsius’s revised bankruptcy plan also released a total of $225 million in cryptocurrency assets intended to be utilized for funding the new business lines that the Securities and Exchange Commission rejected.
Glenn noted that, as a consequence, consumers would receive additional Bitcoin from Celsius. In addition to that, they would also earn equity interests in the newly established Bitcoin mining organization.