Celsius Pivot: Embracing Mining with SEC-Informed Restructuring Strategy

In a recent development, Bitsday uncovered that the U.S. Securities and Exchange Commission (SEC) had initiated an inquiry into the assets of the former crypto lender just hours before Celsius's Monday announcement. This revelation set the stage for a significant shift in Celsius's strategic focus, as detailed in a subsequent court filing.

Celsius, the crypto lending platform, disclosed its decision to undergo a substantial transformation, opting to exclusively concentrate on bitcoin mining. This strategic pivot marked a departure from the company's earlier restructuring plan, which had included a significant emphasis on staking activities, it announced in a court filing late Monday. 

The impetus for this change in direction came in response to feedback from the SEC on specific elements of Celsius's initial restructuring plan. Bitsday reported on the challenges faced by the court-approved reorganization, citing the SEC's insistence on obtaining more comprehensive details about the former crypto lender's assets.

Fahrenheit Holdings, a consortium comprising Arrington Capital and crypto mining entity U.S. Bitcoin Corp., had been tasked with implementing Celsius's reorganization. The successful acquisition of Celsius by Fahrenheit in May 2023, following a competitive bidding process, paved the way for the execution of the original plan. This plan outlined the establishment of a new company registered in Delaware, provisionally referred to as NewCo in official documents. Traditionally, such terminology is used to describe corporate spinoffs before a permanent name is assigned. The court-approved plan indicated that this newly formed entity would focus on both mining and staking activities.

In the latest filing, Celsius expressed its intent to approach the Bankruptcy Court seeking approval for modifications to the plan. These adjustments align with the company's newfound emphasis on the Mining NewCo transaction. Notably, Celsius remains optimistic that these modifications will not necessitate a resolicitation of the plan and anticipates initiating creditor distributions in January 2024.

In response to the SEC's input, Celsius is now set to commence the process of registering shares for a new publicly traded Bitcoin mining company, dubbed "Mining NewCo." The innovative approach involves ownership of the company by Celsius customers. While Bitcoin mining remains the primary focus of this proposed entity, the SEC's guidance has prompted stakeholders to revise their strategy regarding certain assets initially designated for transfer to Fahrenheit Holdings. Instead, these assets will now be retained by Celsius's estates for regulatory reasons. The intention is for these retained assets to be administered and monetized by the Plan Administrator and/or Litigation Administrator, with the proceeds benefiting creditors.

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