In a significant development, Celsius Network, the bankrupt crypto lender, has announced its transition to a mining-only company, NewCo. This decision comes after feedback from the Securities and Exchange Commission (SEC) on its updated bankruptcy plan. The transition is part of Celsius’ overall reorganization plan for its retail platform and mining business.
Earlier, a judge assigned the execution of Celsius’s restructuring to Fahrenheit Holdings, a consortium that includes Arrington Capital and crypto miner U.S. Bitcoin Corp. In May 2023, Fahrenheit emerged as the successful bidder to acquire Celsius.
The ratified plan initially proposed the formation of a new Bitcoin mining corporation, known as “Mining NewCo,” to be owned by Celsius customers. This strategic decision was in line with the initial plan to establish a new entity with Fahrenheit, LLC. However, due to regulatory issues raised by the SEC, Celsius has revised its strategy. This update was communicated by Celsius in a recent post on the X platform.
BREAKING: Celsius to Transition to Mining-Only NewCo following Bankruptcy Court’s Confirmation of Plan
On November 9, 2023, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) confirmed Celsius Network LLC’s (“Celsius” and together… pic.twitter.com/hGkY9CZfus
— Celsius NewCo Community (@CelsiusNewCo) November 21, 2023
Celsius Has Decided to form a Mining-only Company
In partnership with the Official Committee of Unsecured Creditors, Celsius determined that certain assets, originally intended for transfer to the proposed Fahrenheit NewCo, must remain within Celsius’ estates. According to the report, this retention is crucial for regulatory compliance and will facilitate the administration and monetization of these assets for the benefit of creditors.
While Bitcoin mining was intended to be the primary business of the proposed new company, the SEC’s feedback has led stakeholders to decide that “certain” assets, originally slated for transfer to Fahrenheit Holdings, will now be retained by Celsius’s estates due to regulatory considerations. These assets will be managed and monetized by the Plan Administrator and/or Litigation Administrator for the benefit of creditors.
Significantly, the Celsius debtors foresee a downsizing in the overall magnitude and operations of the Mining NewCo compared to the initially proposed Fahrenheit NewCo amidst ongoing discussions. They predict that the total fees and economic incentives for the operators of Mining NewCo will be less than those associated with Fahrenheit NewCo.
