Celsius Network Begins $3 Billion Payout Amid Bankruptcy Exit

Cryptocurrency firm, Celsius Network, has started the distribution of a whopping $3 billion to its creditors, following the approval of its restructuring plan to exit bankruptcy.

A Lifeline for Celsius Network

In November 2023, a New York judge gave Celsius the green light to create a scheme to repay customer assets. This reorganization plan has received the stamp of approval from both the Securities and Exchange Commission (SEC) and the Official Committee of Unsecured Creditors (UCC).

The approved plan facilitates the distribution of crypto, fiat, and common stocks to Celsius creditors via a new bitcoin mining firm, Ionic Digital. Mining company Hut 8 is set to oversee operations at Ionic Digital for the coming four years under a management agreement.

A Remarkable Turnaround

David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, highlighted the company’s impressive turnaround. They noted that when they were appointed in June 2022, many believed Celsius would fade away like other crypto lenders filing bankruptcy at the same time.

However, Celsius managed to navigate complex legal, regulatory, and business issues, securing the cryptocurrency on its platform, achieving a settlement with preferred shareholders, and establishing a litigation trust to pursue counterparties that exploited Celsius.

Regulated Distributions and Shutdown of Applications

Celsius is currently operating under close federal and state regulation to ensure payouts are made securely and promptly during its restructuring period. The company has also started processes to discontinue its mobile and web applications.

New Leadership in Place

Matt Prusak, the current Chief Commercial Officer of Hut 8, has been appointed as the CEO of Ionic Digital. Prusak will also join the UCC-appointed Board of Directors.

A Turbulent History

Celsius Network filed for bankruptcy in July 2022, soon after a former executive was found to have cashed out $21 million. The CEO of Celsius, Alex Mashinsky, was later arrested for fraud and is currently facing charges filed by New York’s attorney general. Mashinsky has pleaded not guilty, with his trial set for September this year.