The Celsius Network, a struggling cryptocurrency lending firm currently in bankruptcy proceedings, is gearing up for a key vote that could reshape its destiny. The company seeks to embark on a radical transformation by transitioning into a creditor-owned entity.
US Bankruptcy Judge Martin Glenn has given the green light for Celsius to initiate the voting process. The heart of the matter lies in the plan to reboot Celsius as a user-owned company, backed by the voice of its creditors.
If the vote goes as planned, approximately $2 billion worth of Bitcoin and Ethereum would be distributed among those who hold accounts with the company.
Moreover, the process includes sending out ballots to account holders, accompanied by comprehensive voting materials that offer a clear and simple breakdown of the company’s strategy for repaying its users. This transparent approach aims to ensure that creditors fully understand the proposal before casting their votes.
Judge Glenn’s approval comes with a caveat: the company’s advisors must furnish additional information about the cryptocurrency industry’s volatility and potential roadblocks that could hinder Celsius’ cryptocurrency mining operations. This indicates a cautious yet forward-looking approach.
The Proposed Plan to Revamp Celsius
Should the majority of creditors support the plan, Celsius is poised to undergo a substantial transformation. Spearheaded by investment firm Arrington Capital, a key player in the Fahrenheit consortium that secured Celsius’ assets, the new incarnation of Celsius would be managed as an entirely new entity.
However, not all creditors are on board with the proposed blueprint. Some have raised concerns about the terms, particularly the notion of being compelled to accept stakes in a relatively untested venture.
Their argument revolves around the value of Celsius’ native token, CEL. They posit that the token should be valued at its original rate rather than the company’s proposed rate.
Judge Glenn’s stance on the matter is shaped by regulatory considerations. He has ruled out returning CEL tokens to holders based on the US Securities and Exchange Commission’s classification of CEL as akin to stock in a public company. This means that the value of these tokens could potentially be wiped out in light of the company’s Chapter 11 bankruptcy filing.
Amidst these intricate negotiations, former Celsius CEO Alex Mashinsky finds himself in legal turmoil. He’s facing allegations of fraud and manipulation of CEL’s value. The legal proceedings are expected to unfold over the coming months, with potential evidence presentations scheduled for early October.