The reorganization plan confirms creditors will receive a mix of cryptocurrency, cash, and shares in the newly formed bitcoin miner Ionic Digital.
Emerging from a tumultuous Chapter 11 bankruptcy, Celsius Network has announced the commencement of a substantial $3 billion repayment to its creditors, involving a blend of cryptocurrency and fiat. This move comes 18 months following the suspension of user withdrawals, as per the company's statement on Wednesday.
In a strategic shift, a segment of the $3 billion is earmarked for the creation of Ionic Digital, a nascent bitcoin mining venture under creditor ownership, as detailed in Celsius' recent announcement.
The plan involves creditors acquiring common stock in Ionic Digital, which is on track to be listed publicly following the attainment of the requisite regulatory green lights. Hut 8, a Miami-based mining entity, will administer Ionic’s mining operations for four years under a management contract.
This development marks a pivot for Celsius, which is set to gradually wind down its operations, including shutting its mobile and web platforms.
Celsius found itself in dire straits, declaring bankruptcy on July 13, 2022, amidst a staggering $1.2 billion deficit on its balance sheet.
In the preceding year, Celsius and its ex-CEO Alex Mashinsky faced legal challenges from multiple regulatory bodies, including the Securities and Exchange Commission, the Federal Trade Commission, and the Commodity Futures Trading Commission. The allegations ranged from customer deception to fraud. Mashinsky, facing fraud charges, is slated for trial in September.
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