Celsius Shifts to Bitcoin Mining-Only Under SEC Pressure

Celsius Network redefines its future in the crypto industry by transitioning to a mining-only company, following challenges from the SEC.

A Bitcoin floating on ice and a mining rig set on another ice block.
Created by Kornelija Poderskytė from DailyCoin
  • Celsius adapted its bankruptcy plan, focusing on mining.
  • The move comes after significant SEC scrutiny. 
  • The defunct crypto lender’s previous plans included staking.

The crypto industry is seeing increasing scrutiny, partly due to several high-profile bankruptcies last year. One is that of Celsius Network, a giant crypto lender that went under in July 2022. 

Amid its ongoing bankruptcy proceedings, Celsius has filed a plan to restart its exchange, albeit with a different focus. Most recently, under pressure from the U.S. Securities and Exchange Commission (SEC), the former lender announced that the reorganized company would focus solely on Bitcoin mining.

Celsius Shift From Crypto Lending to Bitcoin Mining

In a late-night court filing, Celsius Network delineated its updated bankruptcy plan, unveiling a transition to focus solely on Bitcoin mining. This strategic shift emerged in response to the SEC’s pressure on the company’s reorganization plan, which initially included staking and mining.

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Under the new plan, Celsius will form a new entity, referred to as “Mining NewCo.” This company, earmarked for public trading, will be dedicated to Bitcoin mining and owned by Celsius customers.

The company’s reorganization is in the hands of Fahrenheit Holdings—a consortium including Arrington Capital and U.S. Bitcoin Corp. The anticipated timeline for creditor distributions remains set for early 2024.

The Celsius Bankruptcy Case

Celsius Network’s bankruptcy case is a complex web of financial restructuring and legal challenges. To give creditors a path to recovery, the court decided to list Celsius on the Nasdaq and entrust its management to Fahrenheit LLC.

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Moreover, in early November, the parties agreed that Celsius would return about $2 billion in cryptocurrency to account holders, a significant step towards resolving creditor claims. 

Alex Mashinsky, the disgraced founder and former CEO of Celsius Network, faces several lawsuits in the US. A civil case in New York alleges that he defrauded investors by misrepresenting Celsius as a safe alternative to banks. It also alleges that he concealed the company’s significant investment losses. 

In addition to the criminal charges and the New York Attorney General’s lawsuit, Mashinsky faces civil lawsuits by the SEC, the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Federal Trade Commission.

On the Flipside

  • The legal actions against Alex Mashinsky overshadow Celsius’s future operations. This has the potential to impact the reorganized company’s reputation and investor confidence.
  • The profitability of the new mining-only model will be crucial to whether the creditors manage to get some of their lost funds back. 

Why This Matters

The Celsius bankruptcy sets a precedent for how crypto companies might navigate financial distress and regulatory scrutiny. For creditors and investors, the outcome of this case could determine the extent of their recovery and shape their trust in similar platforms in the future. 

Read more about the Celsius bankruptcy: 
$2B Celsius Reimbursement Finally Allocated for Creditors

Read more about Solana’s recent performance: 
Solana’s DEXs Soar, See Record Trading in a Stellar Year

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.