Bankrupt Celsius Network Receives Court Approval for “MiningCo Transaction”

The United States Bankruptcy Court has approved the proposed MiningCo transaction by Celsius Network.

The US Bankruptcy Court has given the green light to a $225 million transaction called the ‘MiningCo Transaction’ for Celsius. This approval also stops any securities ruling in the Chapter 11 proceedings.

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Bankrupt cryptocurrency lending company Celsius Network has reached a major milestone in its Chapter 11 bankruptcy proceedings. The United States Bankruptcy Court for the Southern District of New York has granted approval for Celsius Network’s proposed “MiningCo Transaction” within the framework of its bankruptcy proceedings.

What is the “MiningCo Transaction”?

The court’s approval paves the way for Celsius to proceed with its plan to establish “a public company exclusively dedicated to bitcoin mining.” Under the terms of the MiningCo Transaction, $225 million in fiat will be used to capitalize the new entity, which will take over specified mining assets. Notably, assets from Core Rhodium, Mawson, and Luxor will not be included in the transfer.

Celsius’ Rebirth as “NewCo”

In November, Celsius outlined its plans to relaunch as a new entity called “NewCo.” This new enterprise will focus on staking and mining activities and is projected to have a $1.25 billion balance sheet, including $450 million in liquid cryptocurrency. Celsius expects to generate annual revenue of $10 to $20 million through staking crypto on the Ethereum network.

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Management Agreement Modifications

The court’s order also approves modifications to the Management Agreement. The initial term of the agreement is set at four years, with provisions for extension or early termination. If NewCo’s mining capacity fails to reach the specified Exahash target of 23 EH/s within the initial three years, NewCo has the right to terminate the agreement without incurring an early termination fee, subject to a six-month transition period.

Celsius Network’s Path Forward

The approval of the MiningCo Transaction marks a significant turning point for Celsius Network, which faced financial difficulties and froze customer accounts in 2022, leading to one of the largest crypto collapses of the year. This transaction is expected to play a crucial role in reshaping the company’s trajectory and enabling its recovery.

Q&A: What Readers Want to Know

Q: How will the MiningCo Transaction affect Celsius Network’s customers?

A: The approved transaction will help provide stability to Celsius Network and its customers. It allows for the restructuring of the company’s operations and the creation of a new entity dedicated to bitcoin mining. This reorganization is intended to benefit both the company and its customers by revitalizing and securing the platform.

Q: Will Celsius Network’s customers be able to recover their losses?

A: Celsius Network aims to provide opportunities for its customers to recuperate more of their losses. As part of the MiningCo Transaction, Fahrenheit has agreed to purchase a $50 million minority stake in the new company. These shares will be publicly listed, enabling Celsius customers to sell their stakes and potentially recover some of their losses.

Q: How will Celsius Network generate revenue through staking crypto on the Ethereum network?

A: Celsius Network’s new entity, NewCo, will engage in staking activities on the Ethereum network. Staking involves locking up cryptocurrency to support the network’s operations and, in return, earning rewards. By participating in Ethereum’s staking process, Celsius aims to generate annual revenue of $10 to $20 million.

Future Outlook

The court’s approval of the MiningCo Transaction and Celsius Network’s plans for a rebirth as NewCo demonstrate a commitment to turning the tide for the struggling company. By focusing on bitcoin mining and staking activities, Celsius aims to secure its future and regain stability in the crypto industry.

However, it is essential to closely monitor the execution of the plan and the company’s ability to reach its mining capacity targets. Crypto markets can be volatile, and there are inherent risks associated with mining operations. Therefore, careful assessment and ongoing evaluation are necessary for both Celsius Network’s success and potential investors.

References

1. Order Approving MiningCo Transaction – Official document from the United States Bankruptcy Court for the Southern District of New York.
2. Celsius Network – Archive – Archive of Celsius Network’s plans for relaunching as “NewCo.”
3. Previous Agreements – Exploration of previous agreements related to Celsius Network’s bankruptcy filing.
4. HKbitEX Collaborates with Shanghai Technology Exchange for Asset Tokenization Solutions – Example link showcasing blockchain collaborations and asset tokenization solutions.
5. Securities and Exchange Commission’s Rights – Official website of the U.S. Securities and Exchange Commission (SEC) for information on rights and regulations regarding crypto tokens.

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