Celsius Shifts Focus to Mining Pending SEC Approval
Date: 2023-11-23 Author: Dima Zakharov Categories: BUSINESS
A Transition to Mining
The lending platform Celsius Network, undergoing restructuring, aims to pivot exclusively into cryptocurrency mining post-reorganization. This transition is contingent upon SEC approval of their amended plan, diverging from an earlier proposal that also involved a staking program.
Restructuring Details
The revised plan proposes that debtors allocate Bitcoin and Ethereum amounting to $2 billion. Celsius intends to establish a mining firm and transfer its shares to creditors, offering clients a potential refund of 67-85% of their funds.
SEC's Response and Clarifications
The new initiative emerged following the SEC's review "on certain aspects of the plan." According to CoinDesk, the proposal required clarifications concerning the platform's assets.
Recent Management Changes
In May 2023, the Fahrenheit Group consortium was appointed as the managing entity, winning the bid for the company's assets. Celsius' successor aims to list on the Nasdaq stock exchange.
Approval Process and Expectations
"In the coming weeks, debtors intend to petition the court for approval of plan amendments reflecting the new mining firm deal. They doubt that adjustments will necessitate a reevaluation. Debtors still anticipate payouts to creditors commencing in January 2024," as stated in the document.
Celsius' Strategic Moves
The SEC's feedback led to Celsius' intention to "commence the process of applying for registration of shares of a new publicly traded Bitcoin mining company, which will be owned by clients."
Emphasis on Mining
The primary business of the proposed new firm was reported to be cryptocurrency mining. The Commission's feedback likely led stakeholders to conclude that "certain" assets, initially destined for Fahrenheit Holdings, will now be retained "for regulatory reasons," managed and monetized in the "interests of creditors."
Legal Issues and Settlements
Previously, in September 2022, Celsius' CEO, Alex Mashinsky, departed. In early 2023, the New York Attorney General accused him of defrauding investors "for billions."
On July 13, the US Justice Department brought seven criminal charges against the former head of Celsius, including securities fraud, CEL token price manipulation, and misleading investors. Later, the US Federal Trade Commission announced a settlement agreement with the company, involving a payout of $4.7 billion.
