Celsius Bankruptcy Reorganization Plan Approved by Court; Implementation by Early 2024

• Celsius' exit from bankruptcy, a process that started in July last year, has been approved by a New York court.
• The lender's creditors had voted to approve a plan that would return as much as 85% of their holdings back to them
• Customers who had funds tied up in Celsius will get back about $0.25 per CEL utility token.

Crypto lender Celsius secured approval for its reorganization plan from a bankruptcy court on Thursday, with the implementation expected to be completed by early 2024, the company said.

The order marks Celsius' exit from bankruptcy, filed in July last year, a process that also saw it make a $4.7 billion settlement with U.S. authorities over fraud allegations. At the time of settlement in July, former CEO Alex Mashinsky – who had resigned in September, 2022 – was arrested on fraud charges for allegedly manipulating the price of the lender's CEL token, an allegation he has denied. Mashinsky was released on a $40 million bond, and a court recently ordered his banking and real estate assets frozen. His trial is scheduled for September 2024.

Chief Judge Martin Glenn of the United States Southern District of New York Bankruptcy Court confirmed a modified plan that was mostly agreed upon in late September, when Celsius' creditors voted to approve a plan that would return 67%-85% of holdings back to them. Customers who had funds tied up in Celsius will be getting back about $0.25 per CEL token. CEL was a utility token and its underlying value was based on the utilities it offered on the Celsius Network.

Celsius said on Thursday it would return about $2 billion in cryptocurrency to account holders, according to a Reuters report.

The judge's order also hands control of the implementation of the reorganization to Fahrenheit Holdings, a group that includes Arrington Capital and crypto miner U.S. Bitcoin Corp. Fahrenheit won a bid to acquire the insolvent lender in May 2023. The plan will see the creation of a new company registered in Delaware, currently referred to in filings as NewCo, usually a term used to describe a corporate spinoff before it is assigned a final name. The company will focus on mining and staking.

"NewCo will have a $1.25 billion balance sheet," the filing said. "NewCo intends to stake some or all of this Liquid Cryptocurrency to earn staking yields on the Ethereum network, which would generate anywhere from $10 to $20 million per year."

The mining business is "getting better by the day,” with "no debt,” "125,000 rigs,” "an excellent mining manager in the US Bitcoin" and has "significant earnings power” moving forward, under Fahrenheit’s operation, the filing said.

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