Bankrupt Celsius Network LLC will begin polling account holders on its plan to restart as a new user-owned company, according to Bloomberg News.
The crypto lender will start sending ballots to account holders after getting approval on Monday from U.S. Bankruptcy Judge Martin Glenn, who said he would allow Celsius to send ballots to account holders along with voting materials that had plain-language explanations of the company’s plan to repay its customers following its bankruptcy a year ago, Bloomberg News reported.
Glenn’s approval is also contingent on the company’s advisers providing more information about the volatility of the crypto industry as well as challenges that its crypto mining operation could face. A Celsius lawyer also noted that the company is set to start repaying creditors by the end of this year, according to Bloomberg News.
Celsius filed for bankruptcy in July 2022 and owes billions of dollars to investors. Crypto consortium Fahrenheit won a bid to acquire the crypto lender in May to then operate a new company.
Individual Celsius account holders said they were not pleased with the crypto lender’s repayment plan during the hearing because they would have to take stock in a new venture that could pose risks, Bloomberg reported.
Regulators crack down
Former Celsius CEO Alex Mashinsky has caught the ire of regulators over the past year. New York Attorney General Letitia James sued Mashinsky in January for allegedly defrauding investors.
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” James said in an earlier statement.
Later, a court examiner’s report revealed that Celsius made risky bets with customer funds. Then the Securities and Exchange Commission sued Mashinsky and Celsius last month, accusing them of raising billions through fraudulent and unregistered sales of “crypto asset securities. Mashinksy also faces criminal charges.
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