Bankrupt Celsius Network Reveals Plan To Shut Down App, Here’s Why
When Celsius launched back in 2017, many saw the company as one that had the potential to disrupt the industry with its crypto lending platform. Six years on, Celsius’ chapter in the crypto world seems to be ending, as recent developments will suggest.
App To Shut Down In 90 Days
The Celsius app will shut down within 90 days, according to the company’s revised disclosure statement in its ongoing bankruptcy proceedings. This comes as the company prepares for a new chapter that will see the company operate under a new entity, “NewCo,” which will be managed by Fahrenheit Group and owned by Celsius’ creditors.
As revealed in the statement, Celsius chose 90 days based on past experiences in enabling crypto withdrawals from the app “for custody and withhold account holders pursuant to the Custody and Withhold Settlements.” So users won’t be able to log in to the app or access their Celsius account upon the expiry of this 90-day withdrawal window.
However, there is good news for the company’s creditors as the company outlined plans for repayment. These creditors aren’t restricted to persons or entities that may have opened an account with Celsius. According to the company, it also plans to repay those who “earned rewards on their digital assets in accounts set up with other exchanges or from companies which were part of Celsius’ partner programs.”
As part of the repayment plan, Celsius will “promptly distribute at least $2.03 billion of cryptocurrency to their [its] creditors, subject to the fluctuations in cryptocurrency prices.” It will work with third-party distribution agents to ensure this plan is carried out smoothly.
CEL token price sits at $0.16 | Source: CELUSDT on Tradingview.com
To enable this distribution, the payments platform Paypal has been identified as a potential distribution agent to handle distributions to individual creditors in the US.
The company is also looking to hire a distribution agent to handle distributions to international creditors, corporate creditors, and Custody and Withhold creditors. However, if it fails to do so, the company will keep the Celsius app open for 90 days after the effective date so it can pay these creditors through the app.
Celsius New Entity “NewCo”
As part of the restructuring process, Celsius will transition to a new crypto company called “NewCo,” managed by Fahrenheit Group and owned by customers. The company will also be regulated by the SEC to ensure transparency.
Fahrenheit plans to list the new company’s stock on NASDAQ to maximize profits for the owners and allow the company to tap into the capital market in the future.
The company’s operations will primarily focus on mining and staking, and it will enlist the help of US Data Mining Group, Inc. to handle its mining operations. On the other hand, Proof Group Capital Management will manage NewCo’s staking operations.
Featured image from Cryptopolitan, chart from Tradingview.com
