Celsius hopes bitcoin mining will help it heal its damaged relationships with customers whose funds were frozen
Celsius hopes bitcoin mining will help it heal its damaged relationships with customers whose funds were frozen
cryptocurrency Lender Celsius Network said bitcoin mining is critical to the company’s restructuring efforts at a US bankruptcy court hearing in Manhattan on Monday.
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New Jersey-based Celsius got approval from US Bankruptcy Judge Martin Glenn to spend $3.7 million in construction costs on a new bitcoin mining facility and $1.5 million on customs and duties on imported bitcoin mining rigs. Celsius attorney Patrick Nash told Glenn that bitcoin could provide a way for the mining company, which halted other business operations, such as its cryptocurrency lending, to repay customers whose assets were frozen in the weeks leading up to its bankruptcy filing. .
“In a world where the cryptocurrency market is booming, the mining business has the potential to be of great value,” Nash said.
Celsius Recorded Chapter 11 Protection on July 13, listed a loss of $1.19 billion on its balance sheet. The business model of crypto lenders came under scrutiny following a sharp crypto market sell-off due to the collapse of major token TeraUSD. [UST] and Luna in May
Nash said Celsius’ assets shrank amid extreme volatility, and freezing client accounts was an attempt to stem losses and stabilize its business.
Celsius hopes the mining effort will help it repair its relationship with customers, some of whom sent threats and hate mail to some of the company’s employees in the weeks before its Chapter 11 filing.
But a group of equity investors previewed a possible fight for control over bitcoin mining operations. Investors’ lawyer Dennis Dunne said they could argue that the newly minted coins should be considered the property of the UK subsidiary, which raised funds for mining operations, rather than being distributed for the benefit of all Celsius creditors.
The US Justice Department’s bankruptcy watchdog said customers can also object to Celsius’ spending on bitcoin mining vendors at a time when their own recovery is in doubt.