Celsius hits setback as judge issues new vote for Bitcoin mining reform

Celsius Networks, a cryptocurrency lending platform, may need to get a new vote from creditors for its proposed switch to Bitcoin mining, a US bankruptcy judge suggested in a recent court hearing.

The crypto-lender detailed its plan to set up a bitcoin-only mine when it emerges from bankruptcy on Thursday, November 30, reflecting scaled-down trading from regulators and regulations.

According to reports, Judge Martin Glenn, who is in charge of Celsius Network's Chapter 11 proceedings, complained about the sudden change on Thursday, November 30, emphasizing his repeated advice to Celsius about the need to reach a settlement with the SEC.

The judge said Glenn's proposed change to a bitcoin mining business would be a significant departure from the deal creditors had originally voted on, which would likely face strong opposition from creditors.

Celsius recently announced a post-bankruptcy strategy, narrowing its focus to bitcoin mining amid concerns from the US Securities and Exchange Commission about its initial business plans. While the SEC did not outright reject Celsius' bankruptcy plan, it did state that the firm was previously unwilling to approve crypto-loans and stocks.

Celsius' attorney, Chris Koenig, said at Thursday's hearing that the court-approved bankruptcy plan allowed the company to shift its focus to the mining specialty business. According to Koenig, a new vote is not necessary as the revised agreement will also benefit creditors.

According to the report, two clients, who continued without legal representation, expressed their objections to the deal in court documents, arguing that Celsius should instead investigate completely.

Related: Celsius offers withdrawals to eligible crypto holders

Celsius filed for Chapter 11 protection in July 2022, one of several crypto lenders to go bankrupt following the rapid growth of the industry during the Covid-19 pandemic. The updated Celsius plan would release $225 million in cryptocurrency assets from the control of outside investors, known as the Fahrenheit Consortium, according to Koenig.

Celsius creditors are projected to receive a 67% recovery under the new proposal, up from 61.2% in the previous Fahrenheit settlement, court records show. During the previous auction, post-bankruptcy Bitcoin mining operation Celsius was controlled by US Bitcoin Corp, a participant in the consortium alongside Arrington Capital.

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