Celsius Network has emerged from bankruptcy and will begin distributing more than $3 billion worth of crypto and cash to its creditors through PayPal and Coinbase.
“This milestone marks the conclusion of an eighteen-month process during which the Company built consensus among a wide range of stakeholders, resolved complex novel legal issues, fully cooperated with all regulatory investigations, and developed and consummated the transactions under the Plan,” the Hoboken, New Jersey-based company said in a Wednesday press release.
Ionic Digital, a newly minted spinoff focused on Bitcoin mining, will be owned by Celsius creditors and comprise all of Celsius’ Bitcoin mining assets. Ionic Digital is expected to go public once required approvals are received, according to a press release.
“When we were appointed in June 2022 … [we] believed that Celsius could navigate complicated legal, regulatory and business issues,” David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, said in a prepared statement Wednesday. “Among other achievements, Celsius secured the cryptocurrency on our platform, achieved a settlement with the preferred shareholders, ran a successful auction of the one re-organizable operating business to begin as a new Bitcoin mining company, established a litigation trust to pursue the innumerable counterparties that exploited Celsius and, possibly most importantly, settled with the [Department of Justice], [Securities and Exchange Commission], and [Commodity Futures Trading Commission].”
“But most of all, we are proud of the preservation and distribution of cryptocurrency assets and enhanced recovery for customers and claim holders,” they said.
Crypto influencer and Celsius creditor Tiffany Fong told Banking Dive that creditors would have to wait up to two weeks before instructions on how to access their assets would be distributed. Fong has more than $163,000 locked on Celsius’ platform.
Celsius filed for bankruptcy in July 2022 after halting withdrawals and transfers the previous month, citing “extreme market conditions.” CEO and founder Alex Mashinsky stepped away from the platform months later, following pressure from creditors.
New York Attorney General Letitia James sued Mashinsky early last year, alleging he defrauded investors. Mashinsky was arrested in July on charges of securities, commodities and wire fraud and attempting to manipulate cryptocurrencies.
“Mashinsky misrepresented, among other things, the safety of Celsius’s yield-generating activities, Celsius’s profitability, the long-term sustainability of Celsius’s high rewards rates, and the risks associated with depositing crypto assets with Celsius,” prosecutors said in a charging document.
He was released at the time on $40 million bail, and his real estate and banking assets were frozen by the court. He is set to be tried in September.