Now-defunct Celsius Network to Unstake Ethereum Holdings
Cryptocurrency lending platform Celsius Network has unveiled its plans to unstake its holdings of Ethereum (ETH) as part of its efforts to distribute assets to creditors. The company intends to carry out a significant unstaking event in the coming days, according to a recent announcement. “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.
Liquidity Crisis and Bankruptcy Protection
In July 2022, Celsius Network faced a liquidity crisis due to the crypto market downturn, resulting in a freeze on withdrawals and prompting the company to file for Chapter 11 bankruptcy protection. As part of the settlement plan, qualified users were allowed to withdraw 72.5% of their crypto holdings until February 28. Court documents from September revealed that around 58,300 users held a total of $210 million in custody assets.
Founder’s Legal Troubles and Alternative Plan
Meanwhile, Alex Mashinsky, the founder and former CEO of Celsius Network, is currently out on bail after being arrested on fraud charges and is scheduled to face a jury trial in September. Despite these challenges, Celsius has been granted permission to pursue an alternative plan that involves the creation of a public company focused solely on Bitcoin mining. Under this arrangement, creditors will receive a portion of their recovery through shares in the new mining company, enabling them to benefit from its success and growth.
The plan also unlocks $225 million in crypto assets that were originally intended for financing new ventures but 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. This agreement covers the supervision of five mining locations in Texas, with a combined computing capacity of approximately 12 EH/s (equivalent to 122,000 miners) and over 300 MW of power.
Relaunch as NewCo and Focus on Staking
Celsius has outlined its intentions to relaunch under a temporary name, “NewCo,” until a permanent name is chosen. The revitalized enterprise will focus on staking and mining activities, with a projected balance sheet of $1.25 billion and $450 million in liquid cryptocurrency. The company anticipates generating annual earnings of $10 to $20 million through staking on the Ethereum network.
