Celsius’ Bitcoin (BTC) mining endeavors encounter challenges as a U.S. judge suggests a potential reevaluation through a new vote to address deviations.
As reported by Reuters on November 30, Celsius might need another vote from creditors to alter its business trajectory, transitioning from a lending and staking enterprise to a digital asset mining model.
The company unveiled its intention to shift its focus to mining following a bankruptcy case, aiming to sidestep regulatory scrutiny from the Securities and Exchange Commission (SEC) and address other concerns.
U.S. Bankruptcy Judge Martin Glenn, overseeing the legal proceedings, highlighted a misalignment between what creditors originally voted on and the revised direction being considered by the company.
“This is not the deal that the creditors voted on. The revised deal could face substantial opposition from creditors.”
The primary concern in the arrangement lies in the potential resistance from creditors, introducing the possibility of setbacks in the process. The judge encourages the company to negotiate an agreement with the SEC.
While the Commission has not explicitly rejected the company’s plan, Celsius indicated that the financial regulator may be hesitant to approve a deal that encompasses staking and lending-related activities. The SEC has expressed opposition to such activities in the country, citing improper registrations.
Celsius pleads case
The cryptocurrency lender asserted, through its attorney Chris Koenig, during a court session on Thursday that another vote is unnecessary, contending that the proposed deal is advantageous for all creditors. They emphasized that it provides the company with the flexibility to transition into a mining business.
Celsius perceives this shift as a viable path toward a more sustainable future, as mining operations may encounter less regulatory pressure from the SEC. This is particularly relevant in light of the SEC’s imposition of fines on Kraken over its staking activities.
Some analysts also argue that Bitcoin mining is currently a profitable venture, following a period of uncertainty, with rising asset prices erasing losses from the previous year. Miners, who faced challenges throughout the previous year, have explored unconventional strategies to navigate difficulties, such as selling BTC reserves, venturing into Artificial Intelligence (AI) computing, and divesting assets.
Two customers have voiced their opposition to the process, advocating for a complete liquidation of the company.
In adherence to the company’s initial bankruptcy agreement, the proposed new operation was anticipated to involve $225 million in digital assets, to be overseen by Fahrenheit. The revised deal offers creditors a 67% recovery, an improvement from the 61.2% recovery outlined in the previous agreement.
US Bitcoin Corp, part of the consortium alongside Arrington Capital, will assume responsibility for managing the company’s mining operations moving forward.