Celsius Emerges from Bankruptcy and will Distribute $3B to Creditors

Tanzeel Akhtar
Last updated: | 2 min read
Source: Adobe/Canva

Celsius Network has emerged from bankruptcy and is planning to pay over $3 billion of cryptocurrency and fiat to its creditors.

Part of the bankruptcy plan will include the creation of a new Bitcoin mining company named “Ionic Digital” which will be fully owned by Celsius’ creditors.

Hut 8 Corp. listed on Nasdaq trading under the ticker TSX will manage the mining operations for Ionic Digital. The team has named Matt Prusak, chief commercial officer, of Hut 8, as the CEO of Ionic Digital.

Prusak will work closely with the board of directors. This bankruptcy plan was approved by 98% of Celsius Network’s account holders.

“Today, over 18 months after Celsius paused withdrawals, we began distributing over $3 billion of cryptocurrency, fiat, and stock in Ionic Digital to Celsius creditors,” said Chris Ferraro, plan administrator and former chief restructuring officer, interim CEO and CFO, in a press release.

Former CEO Released on $40M Bond

Last year, the U.S. District Judge set the bail for the former CEO of the Celsius Network, Alex Mashinsky, at $40 million. Back then Mashinsky pleaded not guilty to the fraud charges that he artificially inflated the value of CEL token and misled the customers.

Celsius’ chief revenue officer, Roni Cohen-Pavon, was also charged with artificially inflating the price of the network’s native toke CEL.In January, Mashinsky requested his legal team that the courts dismiss charges relating to commodities fraud and market manipulation.

Giving reasons for this request, the CEO said in the January 12 filing to the court that the commodities fraud charges were “repugnant” and inconsistent with the unclear position the US government has taken on whether crypto assets should be classified as securities or commodities.

Celsius Wallet Activity Increases

Analytics teams have noted that there has been increased activity from Celsius wallets.

In January, it was noted by an on-chain analytics blockchain platform Lookonchain that a Celsius wallet was making transfers to crypto exchanges.

Sharing the information on X (formerly Twitter), Lookonchain highlighted that the defunct crypto lending protocol’s wallet deposited 13,000 Ether tokens – equivalent to $30.34 million in fiat currency – to the Coinbase trading platform.

According to Spot on Chain, “In the last 2 days, #Celsius further deposited 67,500 $ETH ($156.5M) to #Coinbase Prime. Overall, Celsius has moved 847,626 $ETH (~$1.90B) to CEX since Nov 13, 2023. Some of these $ETH might have been absorbed by whales via an OTC deal. Just now, Celsius announced that the distribution of over $3 billion in crypto and fiat to creditors has begun!”