Celsius Network’s Restructured Bankruptcy Plan: What Creditors Need to Know

CryptoMode Celsius Network

The once-revered cryptocurrency lending titan, Celsius Network, has been granted the green light by US Judge Martin Glenn to propose a revamped bankruptcy plan to its stakeholders. The goal? To earn their seal of approval.

The Potential Silver Lining for Affected Celsius Customers 

Should the proposed framework get the nod, impacted clients might see a return of as much as 67% of their investment. This would be facilitated by liquidating prominent digital assets, notably Bitcoin and Ethereum.

As per insights from Reuters, Celsius is poised to present this innovative bankruptcy plan, which, if endorsed, could transform its creditors into proud owners of a freshly minted entity. This move paves the way for clients to reclaim certain crypto assets and secure a commanding position in Fahrenheit Group. For context, this group is a collaboration that houses giants like US Bitcoin Corp., and the blockchain-centric venture capitalist, Arrington Capital, among other notable names.

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Delving deeper, the revised plan by Celsius ensures that a significant majority of clients with the Earn accounts can recover nearly two-thirds of their funds. How? Through a concoction of liquid cryptocurrencies such as BTC and ETH, equity holdings in the emerging firm, and the revenues stemming from a lawsuit against Alex Mashinsky, the previous head honcho of this crypto lending institution.

The Role of Fahrenheit in This Equation 

Fahrenheit is slated to invest in the up-and-coming venture, earmarking a cool $50 million for a minority stake. Furthermore, there’s talk of listing this new company’s stock on the prestigious Nasdaq. This move ensures that Celsius’ clientele can offload the equity they acquire from the bankruptcy deal.

A shadow looms over Mashinsky, with recent events seeing him handcuffed by US law enforcement on weighty charges. These encompass alleged securities, commodities, and wire fraud. Adding salt to the wound, accusations of hoodwinking users about the company’s core operations have also surfaced. Despite these heavy allegations, Mashinsky maintains his innocence, securing his release on a $40 million bond.

While some creditors dissent over the bankruptcy blueprint, an official committee entrusted to champion the cause of junior creditors holds a contrasting view. Their perspective? A resounding endorsement, urging clients to cast their votes in affirmation.

A Brief Recap of Celsius’s Downfall 

In a shocking move last June, Celsius halted all transactions, be it withdrawals, swaps, or transfers, attributing it to volatile market dynamics. Their woes magnified the subsequent month with a bankruptcy filing in New York. But was the market solely to blame? Some regulatory voices hint at deeper malfeasance, singling out dubious actions by the management crew, spearheaded by Mashinsky.

Heavyweights like the US Federal Trade Commission (FTC), the US Securities and Exchange Commission (SEC), and the US Commodity Futures Trading Commission (CFTC) have waded into the fray. Their accusation? Mashinsky’s alleged infractions encompass multiple rule breaches, misleading clientele, and possibly skewing the value of CEL, Celsius’s native token.

Estimations suggest Celsius’s debt is a whopping $4.7 billion, spread across over 100,000 creditors. While Celsius has voiced its commitment to settle this colossal amount as mandated by the FTC, the actual transfer hinges on the beleaguered investors reclaiming their assets.

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