Lending platform Celsius will return $3 billion in BTC, ETH, and fiat to customers

What’s new? Lending crypto platform Celsius has announced its successful exit from bankruptcy after 18 months as a result of completing transactions as part of a reorganization plan approved by 98% of account holders and a New York court. Thus, Celsius was transformed into bitcoin mining company Ionic Digital. It is owned by lenders and operated by miner Hut 8. On January 31, it began distributing more than $3 billion in liquid cryptocurrencies, fiat, and equities to lenders. The company has preliminarily increased the amount of cryptocurrencies distributed by $250 million by converting altcoins to bitcoins and Ethereum.

Press release

What else is known? Ionic Digital’s shares are expected to go public once the necessary approvals are obtained. Ionic will be owned by Celsius lenders, who will be given equity stakes in the company in the form of common stock.

Hut 8 Chief Commercial Officer Matt Prusak has been appointed CEO of Ionic Digital and will work alongside a board of directors, the majority of whose members have been appointed by the unsecured creditors’ committee. Hut 8 will oversee Ionic Digital’s bitcoin mining business under a four-year management agreement. Additional details about Ionic Digital will be released at a later date.

Celsius will also begin an orderly wind-down of its operations, including support for the mobile and web applications of the lending platform.

David Barse and Alan Carr, members of the Special Committee of the Board of Celsius, who managed the bankruptcy proceedings, noted that its completion was “the culmination of an extraordinary team effort and extensive collaboration between Celsius, Hut 8, strategic partners, and our creditors.”

Thus, the company managed to settle preferred shareholder claims, auction off its mining division to startup Ionic Digital, begin litigation with counterparties over the misuse of Celsius, and reach settlements with the Department of Justice, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).

“When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues,” Barse and Carr said.

What is known about Celsius? Launched in 2017, Celsius grew substantially during the COVID-19 pandemic amid the crypto market rally, attracting customers with easy access to loans and high-interest rates on deposits.

Celsius then lent these deposits to institutional investors at interest, but as a result of the collapse of the crypto market, the platform faced a massive outflow of deposits. After several failed restructuring attempts, it filed for bankruptcy in July 2022.

At the same time, the platform received two lawsuits for organizing a financial pyramid scheme, and the media wrote that it lost millions of dollars of clients on high-risk schemes. Later, the US authorities accused the former head of Celsius Alex Mashinsky of market manipulation, and the platform itself was fined $4,7 billion. Last September, former Celsius senior executive Roni Cohen-Pavon admitted to manipulating the rate of the native token CEL.