Celsius Network, a cryptocurrency lending platform, may need to get a new vote from creditors for its planned switch to a bitcoin mining company, a US bankruptcy judge suggested at a recent court session.
The crypto Lender provided details on Nov. 30 of its plan to mine bitcoin (btc) only once it emerges from bankruptcy, a scaled-down business that reflects guidance from regulators.
According to a report, Judge Martin Glenn, responsible for Celsius Network's Chapter 11 proceedings, technology/celsius-network-faces-roadblocks-pivot-bitcoin-mining-2023-11-30/” target=”_blank” rel=”noopener nofollow”>voiced discontent on November 30 over the abrupt change, emphasizing his repeated warnings to Celsius about the importance of reaching an agreement with the Securities and Exchange Commission.
Judge Glenn reportedly highlighted that the proposed transformation into a bitcoin mining business deviates significantly from the agreement that creditors initially voted on, which could encounter considerable resistance from creditors.
Celsius recently announced a scaled-down post-bankruptcy strategy, limiting its focus to bitcoin mining due to skepticism from the US Securities and Exchange Commission over its original business plans. While the SEC did not outright oppose Celsius' bankruptcy plan, the company stated that the agency was reluctant to support crypto lending and staking, activities it had previously disapproved of.
Celsius' attorney, Chris Koenig, reportedly argued during the Nov. 30 hearing that the court-approved bankruptcy plan allowed the company the flexibility to move into a mining-only business. According to Koenig, a new vote is not necessary, since the revised agreement is equally beneficial for creditors.
According to the report, two clients, who proceeded without legal representation, expressed their disagreement with the agreement in court documents and maintained that Celsius should undergo full liquidation.
Related: Celsius Grants Withdrawal Access to Eligible Cryptocurrency Holders
Celsius filed for Chapter 11 protection in July 2022, one of several cryptocurrency lenders to fail following the industry's rapid growth during the COVID-19 pandemic. The updated Celsius plan frees $225 million in cryptocurrency assets from the control of outside investors, known as the Fahrenheit consortium, as Koenig described it.
Under the new proposal, Celsius creditors are expected to receive a 67% recovery, exceeding the 61.2% in Fahrenheit's previous agreement, according to court records. During the above offering, the post-bankruptcy bitcoin mining venture for Celsius will be overseen by US bitcoin Corp, a participant in the consortium along with Arrington Capital.
Magazine: crypto 'Pro-Troublemaker' Glitch Artist Sparks Controversy: nft Creator Patrick Amadon
