Celsius Network starts $3 billion payout after emerging from Chapter 11 bankruptcy

Celsius Network has started to distribute $3 billion worth of cryptocurrency and fiat to its creditors after officially resolving its Chapter 11 bankruptcy, 18 months after it paused user withdrawals, the company said on Wednesday. 

As part of Celsius’ approved reorganization plan , a portion of the $3 billion will be allocated to establish Ionic Digital, a new bitcoin mining company owned by creditors, according to its Wednesday statement .

Celsius creditors will own the mining company through common shares, which are expected to be publicly traded once the company secures necessary approvals. Miami-based mining company Hut 8 will oversee Ionic’s mining operations under a four-year management agreement.

With the transition, Celsius plans to start to phase out its operations by closing down its mobile and web applications.

Celsius declared bankruptcy on July 13, 2022, as the crypto lender saw a $1.2 billion gap in its balance sheet.

Last year, Celsius and its founder and former CEO Alex Mashinsky were sued by several regulators — including the Securities and Exchange Commission, the Federal Trade Commission and the Commodity Futures Trading Commission — for allegedly misleading customers. Mashinsky was also charged with fraud. His trial is scheduled to start in September.