Celsius to start paying over $3b to creditors

Bankrupt crypto lender Celsius claims to have started paying its creditors up to $3 billion.

According to the company’s press release, they are discussing the distribution of cryptocurrency and other assets worth $3 billion among the platform’s creditors. The payments became part of a plan to reorganize the failed crypto lender.

The plan includes distributing more than $3 billion to Celsius‘ creditors and creating a new bitcoin mining company, Ionic Digital, Inc., which Celsius’ creditors will own. Hut 8 Corp will manage its mining operations.

“Today, under the MiningCo Transaction, the company has commenced distributions of over $3 billion of liquid cryptocurrency and fiat to creditors. Ionic Digital was created as a new Bitcoin mining company that will continue to deliver recoveries to creditors.”

Celsius’ announcement

Amid the crypto market’s collapse and depositors’ flight in June 2022, Celsius suspended the withdrawal of funds from client wallets. The company filed for bankruptcy in July. Celsius estimated the hole in its balance sheet to be $1.2 billion and liabilities to creditors to be $4.7 billion.

The collapse of Celsius became one of the largest in the cryptocurrency market. Celsius founder Alex Mashinsky has been charged with fraud. He did not admit guilt.

In late 2023, the Bankruptcy Court in New York approved Celsius Network’s reorganization plan. It involves creating a new company that will only engage in cryptocurrency mining and staking (storage for a fee) to pay off Celsius’ debts. The new company will not be able to accept deposits or issue loans in cryptocurrency, as Celsius did. Celsius’ creditors will have control over it.