America’s securities regulator has been urged to decide if it will approve a plan to transform Celsius Network into a bitcoin mining firm. The proposal seeks to repay customers of the bankrupt cryptocurrency lender with both crypto assets and stock in a new publicly traded mining entity.
New York Judge Hopes for Expedited SEC Decision on Celsius’ Repayment Proposal
Judge Martin Glenn, who oversees the bankruptcy of Celsius, has called on the U.S. Securities and Exchange Commission (SEC) to quickly decide whether it will authorize the company to transform itself into a crypto mining firm, Bloomberg reported.
During a court hearing on Monday, Glenn told a lawyer representing the regulator that he hopes the SEC will expedite the decision-making process because Celsius and its creditors have quickly moved through Chapter 11. The judge was quoted as stating:
The SEC will make whatever decision it believes is the correct one. I just hope the process will move forward, so if there are any bumps in the road we can try and work those out along the way.
The plan is to partially repay customers holding accounts frozen since before the lender filed for bankruptcy in June 2022, using a mix of cryptocurrency and stock in the crypto mining entity. The latter will have a new management team led by Arrington Capital, the report detailed.
Glenn said he’ll issue a ruling as soon as possible but even then, the arrangement would still need the nod from the securities regulator. And if the plan to exit Chapter 11 through the suggested transformation into a new business fails, the crypto company could liquidate.
The repayment proposal, which has been widely supported by creditors, is being challenged by some of Celsius’ customers who prefer liquidation as they would receive more crypto rather than shares in a new firm that is yet to prove itself in the market. Others have complained about the fees paid to bankruptcy advisers who work to ensure creditor support for the plan.
In July of this year, the SEC sued the failed crypto lender accusing it and its former CEO Alexander “Alex” Mashinsky of making fraudulent promises for the platform’s “Earn Interest Program” and misleading investors about the company’s financial state. The agency also pointed out that investors were unable to withdraw billions of U.S. dollars in crypto assets when the business started to collapse.
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