Having filed the chapter 11 bankruptcy, Celsius Network has taken steps in its plan to execute financial restructuring, according to documents published in a hearing this week.
Bitcoin mining rigs will be part of the key strategy in the firm’s strategy, with the company planning to spend $3.7 million to construct a mining facility. Another $1.5 million will be spent on customs and duties to import rigs which have been given the green light.
In brief
- Celsius has received approval to expand its mining operations.
- The mining strategy is one of several attempts to stabilise the business.
- The company faces multiple lawsuits, which may take years to resolve.
- Allegations of token manipulation are among the most recent legal filings.
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Celsius Revaluates
Celsius has an existing mining operation in the United States with over 43,000 rigs. The document outlines plans to increase this number to 112,000 by the second quarter of 2023.
The document also provides insight into Celsius’ stark financials, which fell precipitously from $22.1 billion to $4.3 billion between March 30 and July 14, with third party liquidations nearing $1 billion. It notes a number of actions the firm took to safeguard assets, which included halting services for unsuspecting customers.
As for the next steps, four points are on the agenda. The first is to “preserve value while negotiating a comprehensive restructuring transaction with stakeholders.” The second references the bitcoin mining operational expansion, which would be used to grow the company’s bitcoin holdings.
Celsius is also considering asset sales and investment opportunities. Finally, one section of the Chapter 11 filing highlights a contentious point, which reads:
“It will (i) provide customers with the option, at the customers’ election, to recover either cash at a discount or remain “long” crypto, (ii) maximize returns for stakeholders, and (iii) reorganize the Celsius business.”
On the Ropes
Celsius’ downfall came alongside a wave of liquidations of supposedly ‘too big to fail’ crypto companies, which included the Luna Foundation and 3AC, among others. Earlier this month, the firm managed to repay a troublsome MakerDao loan, recovering 22,000 BTC in the process. Still, investors are anxiously hoping for compensation and reparations, but other parties believe this process may take months if not years until it’s resolved.
In the interim, lawsuits have also been piling up, with an Arkansas resident recently filing a class-action lawsuit. Another lawsuit came from a former employee, who alleged that Celsius leadership was involved in token manipulation. As noted by market analyst on Twitter, PlanC speculated that customer funds may have been used for market manipulation.
So let me get this straight two former #Celsius employees have come forward saying that top executives used customer funds to pump the $CEL Token. Which @Mashinsky than used to cash out 10’s of millions of dollars. Hum… I am not a lawyer, but that doesn’t seem legally kosher.
— Plan©️ (@TheRealPlanC) July 19, 2022
The veracity of these allegations will eventually be resolved in court.
Suffice it to say, these lawsuits will be ongoing, and the firm will still be operational under the Chapter 11 filing. The bankruptcy filing means Celsius has a long road ahead to stabilise its assets, sort legal predicaments, all the while rebuilding confidence in the firm.
Investors and analysts will continue to monitor developments as they emerge regardless. The unprecedented event may yet serve as a case study for when another cataclysmic crypto event visits the industry in the future.
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