New York Judge Allows Bankrupt Celsius to Mine and Sell Bitcoin

A New York Judge has allowed Celsius Network to mine and sell Bitcoin as a means to get back financial stability. The decision came less than a day after the cryptocurrency lender presented a court filing with projections showing that it will run out of cash by October. The documents also revealed that it holds $2.8 billion less than it owes depositors.

Bankruptcy Woes

Celsius was one of the firms hit the hardest by this year’s bear market. In June, the lender halted all user withdrawals citing “extreme market conditions.” Less than a month later, reports of bankruptcy put Celsius under public scrutiny, prompting it to acknowledge a $1.2 billion hole in its balance sheet and file for Chapter 11 bankruptcy. 

Unsurprisingly, documents filed during Celsius’ bankruptcy hearing have revealed the lending platform to be in a worse financial position than originally thought. It risks losing life savings and retirement funds of numerous investors if it goes under.    

For the Greater Good

During the second day of the hearing, judge Martin Glenn, chief bankruptcy judge at the U.S. Bankruptcy court for the Southern District of New York, approved the lender’s request to run Bitcoin mining and selling operations as a way to reinstate financial stability. 

According to Cointelegraph, this decision likely stems from the concerns raised by investors about the unfair outcomes filed by over 250 customers. 

However, the judge raised concerns about the immediate profitability of BTC mining, citing the high upfront cost needed to set up mining infrastructure. In response, Celsius’ attorney reaffirmed that investing in mining will be a profitable venture. The company argued that Bitcoin’s value had grown by 25% since it had filed the petition.

Celsius’ petition to mine and sell BTC was initially opposed by the U.S. Department of Justice and the Texas Securities Board. However, the two bodies withdrew their objection after the cryptocurrency lender clarified it would only sell the mined Bitcoin for cash. 

Limited Activities

The bankruptcy court’s approval is limited to mining and selling the mined Bitcoin. During the hearing, the court barred Celsius from selling debt or equity investments in other crypto companies. The lender will also be required to disclose information about the assets beforehand. 

The final hearing will take place on the 1st of September.