Celsius Network faces roadblocks in pivot to bitcoin mining

investing.com:

By Dietrich Knauth

NEW YORK (Reuters) — Crypto lender Celsius Network may have to seek a new creditor vote on its proposed transformation into a bitcoin mining business, a U.S. bankruptcy judge said during a court hearing on Thursday.

Celsius said last week that it had reduced its post-bankruptcy business plans to focus only on bitcoin mining, citing the skepticism of the U.S. Securities and Exchange Commission (SEC) about its other planned business lines.

U.S. Bankruptcy Judge Martin Glenn of New York, who is overseeing Celsius' Chapter 11 process, expressed frustration on Thursday about the late pivot, saying that he had been a «broken record» about Celsius's need to reach agreement with the SEC.

«This is not the deal that the creditors voted on,» Glenn said. The revised deal could face «substantial opposition» from creditors, he said.

The SEC did not definitively object to Celsius' bankruptcy plan before it was approved, but Celsius said the agency was unwilling to approve crypto lending and staking activity that the agency has opposed in the past.

Celsius attorney Chris Koenig argued at Thursday's hearing that Celsius's court-approved bankruptcy plan gave the company flexibility to pivot to a mining-only business. A new vote is not required because the new deal is equally good for creditors, he said.

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.

Celsius's revised plan frees up $225 million in cryptocurrency assets that would have been managed by a consortium of outside investors, collectively called Fahrenheit, under Celsius's old bankruptcy plan, Koenig said.

Celsius creditors can