According to Bloomberg, US Bankruptcy Judge Martin Glenn has approved the transformation of failed crypto lender Celsius Network LLC into a cryptocurrency mining company. The ruling marks a significant milestone for Celsius, which filed for bankruptcy in 2022 amid a downturn in digital assets but managed to secure enough creditor support for its new plan.
Federal prosecutors have accused the former CEO of Celsius of fraud, and the company's plan to become a crypto miner has been met with skepticism from some customers. The plan still faces regulatory hurdles, as it requires approval from the US Securities and Exchange Commission (SEC). If the crypto mining proposal fails, Celsius may pivot to liquidation.
The ruling followed a multi-week trial during which individual customers questioned the new management team and Celsius bankruptcy lawyers argued that the company's native token, CEL, was essentially worthless when it filed for Chapter 11. They claimed that CEL served as a proxy for company stock, which is typically wiped out in bankruptcy. Judge Glenn's approval of Celsius' plan avoided the need for him to rule on whether CEL constitutes a security, a complex legal issue with broader implications for the regulation of the crypto industry in the US.