Judge Martin Glenn stated that Celsius Network, a cryptocurrency lending platform, might need to secure another vote from creditors before shifting to a Bitcoin mining business, deviating significantly from the original plan approved by creditors, according to reports.
Celsius Network, aiming to exit bankruptcy by focusing on Bitcoin mining, announced its new plan reflecting feedback from regulators.
On November 30, Judge Martin Glenn, overseeing Celsius Network’s Chapter 11 proceedings, raised concerns about the sudden change in direction and its implications for the bankruptcy process, emphasizing the importance of consistency and reaching an agreement with the SEC.
Judge Martin Glenn, warned that Celsius Network’s proposed changes could complicate the bankruptcy process since they deviate from the original plan approved by creditors.
Due to the SEC’s concerns about its original business model, Celsius Network scaled back its post-bankruptcy strategy, focusing on Bitcoin mining.
While the SEC did not object to Celsius’ bankruptcy plan, it expressed reservations about the company’s previous crypto lending and staking activities, which it had previously criticized.
Chris Koenig, attorney for Celsius Network, argued that the company’s bankruptcy plan granted it the flexibility to pursue a mining-only business model, claiming that the revised bankruptcy plan is equally beneficial for creditors and therefore doesn’t require a new vote.
Two unrepresented customers of Celsius have objected to the current bankruptcy plan in court documents, arguing that the company should undergo full liquidation instead.
Celsius’ bankruptcy filing was part of a broader downturn in the crypto industry in 2022, following a period of rapid growth during the COVID-19 pandemic.
Under Chris Koenig’s revised plan, $225 million in cryptocurrency assets would be released from the control of the Fahrenheit consortium and distributed to creditors.
However, if the new proposal is approved, creditors of Celsius are expected to receive a 67% recovery, which is higher than the estimated 61.2% recovery under the previous arrangement with the Fahrenheit consortium.
If the new proposal is approved, the Bitcoin mining venture for Celsius would be led by U.S. Bitcoin Corp and Arrington Capital, both of which were involved in the previous plan.