Bankrupt Crypto Lender Celsius Network to Release Disclosure Statement

by Apr 9, 2023CryptoNews0 comments

Crypto lender Celsius Network has announced that it will be moving forward with its Chapter 11 restructuring plan, with a disclosure statement containing information for claim holders set to be filed on April 12. According to Celsius, the statement will provide adequate information for claim holders to vote on the proposed restructuring plan NovaWulf sponsored. The proposed plan, first presented by Celsius in February, includes creating a public platform owned by Earn creditors called NewCo. If approved, the committee of unsecured creditors will appoint the majority of the board members, with no involvement from Celsius founders.

The filing is expected to include events leading up to Celsius’ bankruptcy, projected recoveries for certain stakeholders, and answers to frequently asked questions. The bankruptcy court is expected to conduct a hearing regarding approval of the disclosure statement on May 17, with a vote on the plan to follow. Since filing for Chapter 11 in July 2022, Celsius’ bankruptcy proceedings have included discussions on assets from the firm’s Earn program, crypto holdings, Bitmain coupons, and the personal information of its users.

The bankruptcy judge approved a March settlement plan allowing Celsius custody account holders to receive 72.5% of their crypto. Celsius has been in financial trouble since the market downturn in 2021, which led to a significant decrease in the value of its cryptocurrency holdings. The company had over $600 million in assets under management in mid-2021, but by the end of the year, its assets had decreased to $96 million. Celsius has continued to operate during its bankruptcy proceedings, with users still able to deposit and withdraw funds from their accounts.

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The disclosure statement is a crucial step in the bankruptcy process, as it provides essential information for claim holders to make informed decisions about the proposed restructuring plan. The statement will include information about how the proposed plan will affect claim holders, the events leading up to the bankruptcy, and the risks associated with the restructuring plan.

Celsius Network was founded in 2017 and has since become one of the leading crypto lending platforms, offering its users high-interest rates on cryptocurrency deposits. The company’s struggles highlight the risks associated with investing in cryptocurrency, as the market can be highly volatile and unpredictable. Nonetheless, many investors view crypto as a promising investment opportunity, with the market expected to grow significantly in the coming years. The outcome of Celsius’ bankruptcy proceedings could have significant implications for the broader crypto industry and highlight the importance of risk management when investing in cryptocurrency.

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