Celsius Network’s Bitcoin Mining Pivot Faces Hurdles, Judge Suggests New Vote
Celsius’ Bitcoin (BTC) mining plans face obstacles as a United States judge hints at a possible new vote to clear deviations.
According to a Reuters report on Nov 30, Celsius may require another creditor vote to change its business operations from a lending and staking enterprise to a digital asset mining model.
The company released plans to operate as a mining company after the bankruptcy case to avoid regulatory scrutiny from the Securities and Exchange Commission (SEC) amid other concerns.
US Bankruptcy Judge Martin Glenn who oversees the judicial process noted a deviation from the terms creditors voted on and what is being considered by the company.
“This is not the deal that the creditors voted on. The revised deal could face substantial opposition” from creditors.”
The main issue in the agreement is a potential resistance from creditors which could take the process multiple steps backwards as the Judge urges the company to reach an agreement with the SEC.
Although the Commission didn’t expressly reject the company’s plan, Celsius stated that the financial regulator may be unwilling to approve a deal that includes staking and lending-related activities which it has opposed in the country citing improper registrations.
Celsius pleads case
The crypto lender argued through its attorney Chris Koenig at a court session on Thursday that there isn’t a need for another vote as this deal is good for all creditors because it affords the company the ability to pivot into a mining business.
The company might see this as a clear pathway towards a more sustainable future as mining operations may not come under further regulatory pressure by the SEC which has fined Kraken over its staking activities.
Kraken will pay $30 million to settle US SEC allegations that it broke securities rules with its crypto-asset staking products https://t.co/pNF6QeXm0k
— Bloomberg (@business) February 9, 2023
Some analysts also argue that Bitcoin mining is currently profitable at the moment after several months in the woods with rising asset prices wiping out losses recorded last year. Miners remained underwater throughout last year with many thinking outside the box to stay afloat deploying measures including selling BTC reserves, pivoting to Artificial Intelligence (AI) computing, and selling assets.
Two customers expressed their dissent to the procedure asking for a full liquidation of the company.
Under the company’s former bankruptcy agreement, the new operation was expected to see $225 million in digital assets which would be managed by Fahrenheit. The new deal will give its creditors a 67% recovery as opposed to 61.2% under the previous deal.
US Bitcoin Corp, a company in the consortium together with Arrington Capital will manage the company’s mining business going forward.