Celsius Network pivots to bitcoin mining after bankruptcy

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[1/2]Celsius Network logo and representations of cryptocurrencies are seen in this illustration taken, June 13, 2022. REUTERS/Dado Ruvic/Illustration/File Photo Acquire Licensing Rights NEW YORK, Nov 21 (Reuters) – Crypto lender Celsius Network has scaled back its post-bankruptcy business plans to focus only on bitcoin mining, citing U.S. regulators’ skepticism of its other planned business lines. Celsius, whose restructuring plan had also envisioned the company earning “staking” fees by validating blockchain transactions and managing its legacy portfolio of cryptocurrency loans, said in a statement late Monday it had changed course after receiving “feedback” from the U.S. Securities & Exchange Commission. Celsius declined to comment on Tuesday. The SEC did not immediately respond to a request for comment. A U.S. bankruptcy court in Manhattan had approved Celsius’ Chapter 11 plan on Nov. 9, clearing the company to return cryptocurrency to customers and create a new company owned by Celsius creditors. The SEC did not definitively say during Celsius’ bankruptcy case whether the new company’s business plans would violate U.S. law, but it reserved the right to make that determination later. The SEC has argued in past public statements that most crypto lending and staking activity should be regulated to ensure that customers have sufficient information about how their crypto assets are used. Celsius said it now plans to hold back certain assets that would have been transferred to the new company, and instead liquidate them as a part of the wind-down of its bankruptcy. Bitcoin mining was always meant to be the “core business” of the new company, Celsius said. The pivot has led to further negotiations with Fahrenheit, a consortium of bidders selected to lead the reorganized company. Celsius said it expects to seek court approval of a modified bankruptcy plan in the coming weeks. Celsius said the “reduction in scope and scale” of the new company should lead to lower management fees and increase the amount of cryptocurrency Celsius will directly return to customers beginning in January 2024. Fahrenheit, led by hedge fund Arrington Capital and U.S. Bitcoin Corp, did not immediately respond to a request for comment. New Jersey-based Celsius filed for Chapter 11 protection in July 2022, one month after freezing customer accounts to prevent withdrawals. Celsius, once valued at $3 billion, was one of the largest crypto collapses in 2022, along with FTX, Voyager Digital and BlockFi. Crypto lenders Voyager and BlockFi decided to fully shut down their businesses and return some crypto to customers during their bankruptcies. Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Richard Chang Our Standards: The Thomson Reuters Trust Principles. Acquire Licensing Rights, opens new tab

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