Celsius Network Approved To Sell Mined Bitcoin To Cover Operations
During the hearing on August 16, a bankruptcy court judge approved Celsius Network’s plans to sell bitcoin it’s mined to fund its operations, despite considerable opposition from the US Trustee appointed to the case.
On August 16, parties to the bankruptcy proceedings involving cryptocurrency lender Celsius reconvened to resolve a number of issues pertaining to the business’ operations as it contemplates a potential reorganization.
Chief U.S. Bankruptcy Judge Martin Glenn in Manhattan expressed concern at a hearing that the bitcoin mining would not be immediately profitable since Celsius needs to make additional investments to get its mining facilities running at full capacity, but said he would respect the company’s business judgment and allow it to proceed.
He did, however, block Celsius from selling equity or debt investments in other crypto companies until it provides more information about the assets it wishes to sell.
Celsius’ spending has been under scrutiny in bankruptcy court since it filed for Chapter 11 on July 13 in the wake of its decision to freeze customer accounts. Its business model, like that of other crypto lenders, came under scrutiny following a sharp selloff in the crypto market spurred by the collapse of major tokens terraUSD and luna in May.
Ross Kwasteniet, an attorney for Celsius with Kirkland & Ellis, acknowledged that the mining operation would initially be in the red, but claimed during the hearing that the company is close to turning a profit after spending a sizable amount of money on purchasing computers and constructing facilities for the mining operation.
The Texas State Securities Board and the U.S. Department of Justice had objected to Celsius’ investment in the mining operation, but they later withdrew their opposition after Celsius made it clear that it would only sell the mined bitcoin for cash rather than use it as collateral for additional loans.
Celsius has previously said bitcoin mining is key to its restructuring efforts, and it received permission early in its bankruptcy case to spend $5.2 million on mining efforts.
Celsius is exploring more significant sales of some or all of its assets while in bankruptcy, and it will return to court on September 1st to get approval for a process and schedule for auctioning its assets.
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