Following bankruptcy, Celsius Network switches to bitcoin mining
After receiving "feedback" from the U.S. Securities & Exchange Commission, Celsius announced that company has altered its strategy.
NEW YORK: Due to U.S. regulators' mistrust of its other intended business lines, cryptocurrency lender Celsius Network has trimmed back its post-bankruptcy business plans to concentrate primarily on bitcoin mining.
In a statement released late on Monday, Celsius, whose restructuring plan also included the company earning "staking" fees by overseeing its legacy portfolio of cryptocurrency loans and validating blockchain transactions, said it had changed directions in response to "feedback" from the U.S. Securities & Exchange Commission.
On Tuesday, Celsius declined to comment. When contacted for comment, the SEC did not reply right away.
On November 9, a U.S. bankruptcy court located in Manhattan accepted Celsius's Chapter 11 plan, allowing the company to give back bitcoin to its clients and establish a new business that would be controlled by Celsius' creditors.
The SEC reserved the right to determine at a later time whether the business intentions of the new company would be in violation of U.S. law, although it did not definitively state during Celsius' bankruptcy case.
In previous public remarks, the SEC has maintained that the majority of cryptocurrency lending and staking activities have to be governed in order to guarantee that consumers are adequately informed about the uses of their cryptocurrency holdings.
Celsius stated that as part of winding down its bankruptcy, it now intends to liquidate some assets that were scheduled to be transferred to the new business.
According to Celsius, the "core business" of the new venture was always going to be bitcoin mining.
Further talks with Fahrenheit, the group of bidders chosen to head the restructured business, have resulted from the pivot. Celsius stated that it anticipates requesting in the upcoming weeks for the court to approve a revised bankruptcy plan.
According to Celsius, the new company's "reduction in scope and scale" should result in lower management costs and more cryptocurrency that will be returned to users directly starting in January 2024.
A request for comment from Fahrenheit, which is led by U.S. Bitcoin Corp. and hedge fund Arrington Capital, was not immediately answered.
Based in New Jersey July 2022: Celsius, a month after freezing customer accounts to stop withdrawals, filed for Chapter 11 protection. Celsius, along with FTX, Voyager Digital, and BlockFi, was one of the biggest cryptocurrency collapses in 2022, with a once-valuation of $3 billion. During their bankruptcy, cryptocurrency lenders BlockFi and Voyager made the decision to completely close down their operations and restore some cryptocurrency to clients.