Celsius Creditors Overwhelmingly Approve Reorganization Plan

By Mark Hunter

2 weeks agoTue Sep 26 2023 09:06:55


Reading Time: 2 minutes

  • 95% of creditors have voted to approve a Celsius reorganization plan
  • The plan would see $2 billion worth of BTC and ETH distributed
  • The SEC has formally lodged concerns about Coinbase’s role in the process

Celsius creditor groups have voted overwhelmingly to approve a reorganization plan that will see around $2 billion worth of bitcoin and ether returned to them. Celsius noted that the 95% vote is a “major milestone for Celsius” as it will allow to company to enter the next phase of its bankruptcy, although it does still need to be ratified by the United States Bankruptcy Court for the Southern District of New York. This isn’t expected to prove a problem, however, although there may be issues further down the line if Coinbase is still used.

95% Votes in Favor

The current rehabilitation plan for Celsius creditors involves redistributing approximately $2 billion worth of Bitcoin and Ether to former customers as well as ownership in a newly established entity provisionally named “NewCo.”

NewCo will expand Celsius’ Bitcoin mining operations, stake Ethereum and find other “new, value-enhancing, compliant business opportunities” to increase the value in the company, although hopefully this doesn’t lead to a repeat in the kind of interest-chasing that brought down the crypto space in 2022.

The management of this new company will be entrusted to the Fahrenheit Group, a coalition of crypto-focused individuals and entities that includes former Algorand CEO Steven Kokinos, venture capital firm Arrington Capital, crypto mining company US Bitcoin Corp, Proof Group Capital Management, and Arrington Capital advisor Ravi Kaza.

SEC Wants to Prevent Coinbase Involvement

Celsius revealed yesterday that the vote had passed by a massive majority, allowing creditors to move on, providing the court approves the deal:

Thank you to all our creditors for your dedication over the past year. This marks a major milestone for Celsius.

— Celsius (@CelsiusNetwork) September 25, 2023

There could be trouble not far down the road, however, if the Securities and Exchange Commission (SEC) has anything to do with it. Celsius plans to use Coinbase to distribute funds to Celius creditors, but the SEC has complained that its involvement goes “far beyond the services of a distribution agent” with Celsius “contemplating brokerage services and master trading services.”

The SEC has formally opposed the use of Coinbase in this manner, but the exchange plans to put its case forward in bankruptcy court. This will make for an interesting showdown…as long as Celsius creditors are not negatively impacted by it.

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