Celsius, a crypto lending company, had gone under a bankruptcy lawsuit recently. To rectify damages, it proposes bitcoin mining to restore customers’ money.
Cryptocurrency lending Company Celsius Network believes Bitcoin mining is the crucial method to restructure the company back to its initial state. Further, they have also mentioned it during the court hearing in Manhattan on Monday.
Celsius Creditors Take Action To Stop The Company From Selling Mined Bitcoin
Celsius has received approval from Martin Glenn ( US Bankruptcy Judge) to spend approximately USD 3.7 Million to restructure the company. And invest in a Bitcoin Mining facility and also nearly USD 1.5 million to pay the duties and customs tax on the Bitcoin Mining Rigs.
Celius Network’s lawyer said the company has ceased financing and Bitcoin Mining may refund customers.
- Texas Regulators have asked the US bankruptcy court to not grant permission to Celsius to monetize the bitcoin mining.
- A formal object has been filed on 12th August 2022, by the Texas State Securities as earlier Celsius has made wrong decisions for asset deployment and repaying its customers through bitcoin mining does not comply with the state regulatory demands.
- Celsius has failed to outline, how Bitcoin mining would benefit the investors
Further, he added that the cryptocurrency markets are going to rebound and there is huge potential in the mining business.
Celsius had held for Chapter 11 protection in mid-July and had listed USD 1.19 Billion deficit on the balance sheet. The fall of major crypto tokens like Terra USD (UST) has prompted a crypto market selloff.
Due to the Crypto Market’s volatility, Celsius’s assets dropped and all customer accounts were suspended.
Celsius hopes that bitcoin mining would help to rebuild its relationship with its existing customers. A lot of customers have sent some threat letters and emails to all the employees of Celsius before they filed for bankruptcy.
Hurdles For Bitcoin Mining Proposal By Celsius
A lot of equity investors have previewed the proposal and they might want control of Bitcoin mining. Further, Dennis Dune (investor’s Lawyer) has put up the demand that all the tokens minted should be under the UK subsidiary that helped Celsius to raise funds for the Bitcoin mining and it should not be distributed to the celsius Creditors.
Also, there is also a possibility that Customers might put an objection to celsius’ spending on Bitcoin mining without returning the customer’s money according to the Bankruptcy Watchdog at the US Department of Justice.
The Texas State Securities Board believes Celsius Network shouldn’t be permitted to mine Bitcoin and sell bankruptcy assets without specifics. The bitcoin market’s instability and volatility pose a risk to creditors.