Defunct Crypto Lender Celsius Reveals Updates Regarding New Bankruptcy Deal
Celsius, the defunct cryptocurrency lender, recently submitted an amended bankruptcy proposal to indicate the success of its asset acquisition by the Fahrenheit consortium. However, observers believe the new plan could face legal opposition from Celsius borrowers who want a different arrangement to auction the company’s assets.
Fahrenheit Wins Celsius Bid
In an announcement last month, Fahrenheit, a consortium of prominent entities like venture capital firm Arrington Capital and miner US Bitcoin Corp emerged as the winner of the bid previously valued at approximately $2 billion. Moreover, Fahrenheit’s emergence marked a significant setback for NovaWulf, who had attempted to claim ownership of Celsius’ assets.
The recently filed plan submitted on Thursday is awaiting approval from the New York bankruptcy court responsible for overseeing the winding-up process. According to reports, Celsius’ creditors will express their disagreement and challenge the proposed plan.
David Adler, a legal representative from McCarter & English, opposed the proposed deal, stating that it blatantly disregards consumer lending regulations in the United States. Taking to Twitter, Adler emphasized that the group of borrowers he represents in the case will vehemently contest the plan, primarily due to Celsius’ refusal to return their initial collateral.
Adler added that the Celsius group must demonstrate its commitment to advancing the case and maintaining open lines of communication with relevant parties. Then, it can retain the exclusive right to initiate a bankruptcy plan.
The legal advisor also said his clients are discontented by the lack of attention they have received thus far. According to him, his clients have been “treated like mushrooms for the past seven weeks,” and he stressed that there is a need to correct this situation.
The newly formed company will receive substantial liquid crypto tokens valued between $450 to $500 million as part of the Fahrenheit agreement. Additionally, US Bitcoin Corp has been tasked with building several crypto mining facilities, including developing a robust 100-megawatt power plant.
What Next For Celsius?
Last year’s crypto market rout triggered a series of high-profile crashes of trading firms in the virtual currency industry, which resulted in multiple bankruptcies with billions of investors’ funds stuck. Following improvements in the industry’s landscape, some bankrupt firms are eyeing a comeback with some new offerings.
Unsurprisingly, others are opting to cut their losses by liquidating their assets. An instance is Celsius’ auctioning of its asset, with Fahrenheit emerging as the highest bidder.
Part of the deal entails using the firm’s $500 million worth of liquid crypto assets to establish a new platform, while creditors will get a pro-rata amount of what is left of the funds. The terms outlined by Fahrenheit to generate revenue for Celsius 2.0 include obtaining approval for new lending products and services and resuming Celsius’ mining activities.
Ultimately, Celsius creditors are at the receiving end of some of the steps Fahrenheit intends to take to recover some of the company’s funds. One such step is a legal suit against the firm’s former CEO, Alex Mashinsky, and other top executives.
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