Celsius Could Start Paying Customers By Year End, But There's A Catch

Bankrupt crypto lender Celsius plans to start paying back its customers by the end of the year but it all depends on a court approval.

Celsius started a bankruptcy trial Monday over its plan to restart as a user-owned Bitcoin miner and to pay customers whose funds were frozen on the platform since June 2022.

During the bankruptcy proceedings, Christopher Koenig, a lawyer for Celsius, said the bankrupt crypto lender plans to exit bankruptcy with $450 million in seed funding.

The funding will come from crypto consortium Farenheit LLC – the same group that won the bidding on Celsius' assets in May and will manage the mining and staking business of the new Celsius business.

A court filing, dated Sept. 29, revealed Celsius was planning to repay its creditors partially using $2.03 billion in Bitcoin, Ethereum and stock in the new company, dubbed "NewCo."

The revived version of Celsius will reportedly operate as a "user-owned Bitcoin miner," leaving the fate of the once successful crypto lending business uncertain.

Martin Glenn, bankruptcy judge for the Southern District of New York, will make a decision on whether to approve Celsius' plan.

Aside from the judge's approval, Celsius' restructuring plan also needs to be cleared by security regulators. Despite the overwhelming votes in favor of it, it's still being questioned by some creditors.

It was previously reported that Celsius initially planned to relaunch its firm sometime in August. At the time, the bankrupt crypto lender conducted a poll among its customers to get their views about the plan.

While Celsius last month announced that 95% of its customers voted for the recovery plan, a Bloomberg report claimed some parties were opposed to it, particularly those to whom the company owed, including one creditor who owed approximately $82 million from the lending business.

Roni Cohen-Pavon, the former chief revenue officer of Celsius, pleaded guilty to four criminal charges last month, which include manipulation of the exchange's crypto token Cel, securities fraud and wire fraud, before Manhattan District Judge John Koelti during a court hearing.

He also agreed to cooperate with the U.S. Attorney's Office and the FBI's ongoing investigations and to testify in court if needed, his plea agreement showed.

Meanwhile, Celsius ex-CEO Alexander Mashinsky sought the dismissal of his case filed by the U.S. Federal Trade Commission (FTC).