The now-defunct cryptocurrency lender, Celsius Network, has unveiled its plans to unstake its Ethereum (ETH) holdings as part of its strategy to distribute assets to creditors.
In a recent announcement on X, Celsius Network shared its intention to execute a “significant” unstaking event in the coming days.
“Celsius will unstake existing ETH holdings, which have provided valuable staking rewards income to the estate, to offset certain costs incurred throughout the restructuring process,” the company stated.
Celsius Network encountered a liquidity crisis in July 2022, attributed to the downturn in the crypto market, leading to a suspension of withdrawals.
Following the liquidity crisis, Celsius Network filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York.
Since then, the company has been actively pursuing a settlement plan, allowing eligible users to withdraw 72.5% of their crypto holdings until February 28.
Court documents from September disclosed that around 58,300 users held a total of $210 million in what the court categorized as “custody assets.”
Simultaneously, Alex Mashinsky, the founder and former CEO of Celsius Network, who is currently out on bail after facing fraud charges, is slated to undergo a jury trial on September 17.
Celsius Shifts Focus to Crypto Mining
In the previous month, Judge Martin Glenn granted Celsius the approval to pursue a second alternative, previously endorsed by Celsius’ creditors. This alternative involves establishing a public company exclusively focused on Bitcoin mining.
Under this updated arrangement, creditors will receive a part of their recovery in the form of shares in the forthcoming Bitcoin mining company. This structure enables creditors to participate in and benefit from the success and expansion of the mining operations.
Additionally, this plan unlocks $225 million in crypto assets initially designated for financing new ventures, which were rejected by the Securities and Exchange Commission (SEC).
The newly established entity, named MiningCo, will be operated by Hut 8 under a four-year mining management contract.
As part of the agreement, the supervision of five mining locations in Texas is included, collectively possessing a computing capacity of approximately 12 EH/s (equivalent to 122,000 miners) and over 300 MW of power.
In a court filing made in November, Celsius outlined its plans to reemerge under a temporary name, “NewCo,” until a permanent name is selected.
The rejuvenated enterprise will primarily focus on staking and mining activities, showcasing a projected balance sheet of $1.25 billion, with $450 million in liquid cryptocurrency, according to court documents.
The company envisions generating annual earnings of “$10 to $20 million” through staking cryptocurrency on the Ethereum network.
