Celsius, the crypto lending platform, has successfully emerged from Chapter 11 bankruptcy proceedings in the United States.
The company is now gearing up to distribute a staggering $3 billion in both cryptocurrency and fiat to its creditors. Additionally, Celsius is set to embark on a new venture in the form of a Bitcoin mining company, Ionic Digital.
In an official press release on January 31st, Celsius announced that Ionic Digital would be managed by Hut 8, with Matt Prusak, Chief Commercial Officer of Hut 8, at the helm.
The purpose of Ionic Digital is to ensure the continued delivery of recoveries to Celsius’ creditors.
The company also revealed its intention to take Ionic Digital public, pending the necessary approvals.
A remarkable 98% of Celsius’ creditors voted in favor of the bankruptcy exit plan.
This development comes after an 18-month-long hiatus on withdrawals, initiated in June 2022, and the subsequent bankruptcy filing a month later.
Celsius managed to bolster the amount of cryptocurrency available for distribution to creditors by approximately $250 million, primarily through the conversion of altcoins into Bitcoin (BTC) or Ethereum (ETH) and through previous settlements.
Celsius will be winding down its operations and discontinuing its mobile and web applications by February 28th.
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Creditor distributions will be facilitated through popular platforms like PayPal, Venmo, and Coinbase. Some creditors have already submitted claims forms on Coinbase’s X platform.
David Barse and Alan Carr, members of a special board that guided Celsius through its bankruptcy proceedings, expressed their satisfaction with the company’s successful exit.
They noted that many had assumed Celsius would follow in the footsteps of other crypto lenders that filed for bankruptcy around the same time.
They credited their achievement to the tremendous teamwork that made it possible.
Celsius’ decision to pause withdrawals in 2022 was aimed at improving its capacity to fulfill withdrawal obligations, especially after the significant drop in the value of its native token, Celsius (CEL), during that year.
The bankruptcy process also involved Celsius settling $4.7 billion in fines with regulatory bodies such as the United States Federal Trade Commission, the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
In a related development, the company’s former CEO, Alex Mashinsky, was arrested and charged by federal prosecutors with various financial fraud allegations, including manipulating the price of CEL and misleading Celsius customers.
Mashinsky, who maintains his innocence, is currently out on a $40 million bond and is awaiting trial in September.
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