Home CryptoCurrency News Celsius’ Bitcoin Mining Subsidiary Joins Crypto Lender in Bankruptcy Filing
CryptoCurrency News - July 14, 2022

Celsius’ Bitcoin Mining Subsidiary Joins Crypto Lender in Bankruptcy Filing

Celsius Mining, the Bitcoin mining subsidiary of the troubled crypto lending firm Celsius Network, has joined its parent company in filing for bankruptcy.

After a month of uncertainty and speculations about the future of the company, Celsius (the lending arm) announced it initiated voluntary Chapter 11 bankruptcy protection proceedings late on Wednesday.

In its statement, the crypto lender said that “certain of its subsidiaries” initiated proceedings too, with Celsius Mining and six other affiliated entities joining the list of companies seeking bankruptcy protection, according to the court documents.

Notably, Celsius Mining submitted a draft registration statement with the U.S. Securities and Exchange Commission (SEC) for an initial public offering in May, just a month before its parent company abruptly froze withdrawals from its platform.

Celsius expected that the registration statement would become effective once the SEC completed its review; however, the bankruptcy proceedings initiated by the New Jersey-based company are essentially bringing those plans to an end.

Celsius had reportedly invested $500 million in its mining operations, including $200 million the company used for mining equipment and positions in Bitcoin mining firms Core Scientific, Rhodium Enterprises, and Luxor Technologies, according to a June 2021 statement.

In March, Celsius Mining signed a 100 megawatt (MW) co-location deal with Australian Bitcoin mining company Mawson Infrastructure (MIGI) that saw it provide a data center to host Mawson’s mining hardware.

Under the terms of the deal, Mawson issued Celsius 3.85 million warrants exercisable for one share of common stock at $6.50.

What’s next for Celsius?

Celsius became the third prominent crypto company to file for bankruptcy in recent weeks, following Three Arrows Capital (3AC) and Voyager Digital.

Commenting on the move, the firm’s CEO Alex Mashinsjy said it was “the right decision for our community and company” amid the liquidity crisis that forced it to halt operations in June.

The lending firm spent the last month paying back loans and its outstanding debts totaling over $1 billion and, per the company’s latest blog post, is now confident that the financial restructuring will provide it with “the best opportunity to stabilize the business.”

As for the frozen withdrawals, the company said that while it intends to lay out a plan that “restores activity across the platform, returns value to customers, and provides choices,” it is “not requesting authority to allow customer withdrawals at this time.”

“Existing loans originated by Celsius affiliates will continue to be serviced. Maturity dates, margin calls, and interest payments will continue as they have in the past,” it added.

Want to be a crypto expert? Get the best of Decrypt straight to your inbox.

Get the biggest crypto news stories + weekly roundups and more!

Bitnews.gold

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Not The 2018 Bear Market, Bitcoin Price Could Hit $20,000 In December

The Bitcoin price rebounded off the low of its current range and retraced its weekend loss…