Most creditors affected by the Celsius bankruptcy have cast their votes in favor of a repayment plan. According to Stretto, the bankruptcy firm overseeing the case, more than 98% of most classes voted for the plan.
The U.S. Bankruptcy Court for the Southern District of New York is set to hear the case on October 2, with the deadline for voting having passed on September 22. Under the proposed plan, debtors will distribute approximately $2 billion in bitcoin and ether to creditors. Additionally, the Official Committee of Unsecured Creditors has expressed its support for the plan.
NewCo to take over Celsius operations
Moreover, the plan outlines the distribution of equity in a new company, referred to as “NewCo,” to the creditors. Managed by the Fahrenheit Group, NewCo aims to expand the existing Bitcoin mining operations of the debtors, stake Ethereum, and develop new, regulatory-compliant business opportunities. Fahrenheit Group had previously won the bid to acquire Celsius’ assets in May.
This comes after Celsius filed for bankruptcy last year, owing billions to investors. The SEC had also sued Celsius and its former CEO Alex Mashinsky, for alleged fraudulent activities and unregistered sales of crypto asset securities.
However, the Securities and Exchange Commission (SEC) expressed reservations about Coinbase’s involvement in the Celsius bankruptcy plan. According to a filing last Friday by the SEC, Celsius intended to use Coinbase to distribute crypto to its international customers. The SEC argued that the agreement between Coinbase and Celsius goes beyond mere distribution services, raising concerns that echo the SEC’s ongoing lawsuit against Coinbase for operating as an unregistered broker and exchange.
Coinbase Chief Legal Officer Paul Grewal took to social media to defend the company’s engagement with Celsius. He questioned why the SEC would object to a reputable U.S. public company taking on the role of distributing crypto back to Celsius’ customers. This adds another layer of complexity to the already strained relationship between Coinbase and the SEC, which had issued a Wells notice to Coinbase earlier this year.
In a separate but related development, the U.S. Trustee has also voiced concerns about the Celsius plan. The Trustee questioned whether creditors have sufficient information to make an informed decision on approving the plan. This comes amid ongoing legal woes for Celsius, which faces allegations from the SEC for fraudulent activities and manipulation of its native token, CEL.
