According to Bloomberg’s report, the United States bankruptcy court has approved cryptocurrency lending company Celsius’s plan to transform into a Bitcoin mining company owned by creditors as part of a broader debt repayment scheme.
Judge Martin Glenn stated on Thursday (9th) that he would approve Celsius’s plan to repay customers through a combination of crypto assets and newly listed Bitcoin mining company stocks. Celsius’s lawyers indicated that the platform may begin distributing assets in early next year.
Celsius’s transformation into a cryptocurrency mining enterprise has been questioned by some customers and still faces regulatory obstacles. The company stated that the plan still needs approval from the U.S. Securities and Exchange Commission (SEC), and if the cryptocurrency mining scheme fails, Celsius may turn to liquidation. The judge has urged the SEC to make a decision on approval as soon as possible.
The ruling approving Celsius’s plan concluded weeks of hearings, during which individual customers raised questions about Celsius’s new management team and expressed dissatisfaction with the company’s bankruptcy plan and the costs of bankruptcy protection. These customers believe that the plan significantly undervalued Celsius’s CEL token.
Celsius’s bankruptcy lawyer argued that when Celsius filed for bankruptcy protection in 2022, CEL was essentially worthless, as their argument was that CEL was seen as a representation of company stock, which typically loses nearly all value in a company’s bankruptcy. The judge stated that Celsius’s bankruptcy plan avoided the need for him to rule on whether CEL constitutes a security, which is a tricky legal issue with broader implications for how the U.S. regulates the cryptocurrency industry.