Celsius Network Restructures Business Plans
Crypto lender Celsius Network has announced a change in its post-bankruptcy strategy, opting to concentrate solely on bitcoin mining. This decision comes in response to concerns expressed by U.S. regulators regarding its other proposed business ventures.
Initially, the company’s restructuring plan included earning “staking” fees by validating blockchain transactions and managing its cryptocurrency loan portfolio. However, Celsius has altered its course due to feedback received from the U.S. Securities & Exchange Commission (SEC). The SEC, in the past, has expressed its belief that most crypto lending and staking activities should be subject to regulation to ensure adequate protection for customers.
Approval of the Chapter 11 plan by a U.S. bankruptcy court in Manhattan allowed Celsius to return cryptocurrency to customers and establish a new company under the ownership of Celsius creditors. Although the SEC did not definitively state whether the planned business ventures would breach U.S. law, it reserved the right to make a determination at a later stage.
Bitcoin Mining as the Core Business
Celsius has emphasized that bitcoin mining has always been intended as the “core business” of the reorganized company. Consequently, Celsius plans to retain specific assets that were slated for transfer to the new company and instead liquidate them during the bankruptcy wind-down process.
This strategic shift necessitated further negotiations with Fahrenheit, a consortium chosen to lead the reorganized company. Celsius anticipates seeking court approval for a modified bankruptcy plan in the near future.
As a result of this reduced scope and scale, Celsius expects management fees to decrease, while the amount of cryptocurrency directly returned to customers is predicted to increase starting in January 2024. Arrington Capital and U.S. Bitcoin Corp, leaders of the Fahrenheit consortium, did not immediately provide a comment on this development.
Celsius, based in New Jersey, filed for Chapter 11 protection in July 2022, temporarily freezing customer accounts to prevent withdrawals. The company, once valued at $3 billion, joined the ranks of the major crypto collapses in 2022, alongside FTX, Voyager Digital, and BlockFi.