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Crypto Lender Celsius Defends Bitcoin Mining Plans, As Bankruptcy Proceedings Begin
Cryptocurrency lender Celsius Network said bitcoin mining is key to the company's restructuring efforts at a U.S. bankruptcy court hearing on Monday in Manhattan.
Uzma D.
6:59 19th Jul, 2022

Based in New Jersey Celsius won permission from U.S. Bankruptcy Judge Martin Glenn to spend $3.7 million on building a new bitcoin mining facility and $1.5 million on customs and tariffs on imported bitcoin mining machines.

Celsius's lawyer, Patrick Nash, told Glenn that bitcoin mining could give a method for the company, which has ceased other commercial operations such as cryptocurrency lending, to reimburse customers whose assets were frozen in the weeks leading up to its bankruptcy declaration.

"If the cryptocurrency market recovers, the mining industry has the potential to be pretty significant," Nash said.

On July 13, Celsius filed for Chapter 11 bankruptcy protection, citing a $1.19 billion imbalance on its balance sheet. Following the collapse of prominent currencies terraUSD and luna in May, the business model of crypto lenders was called into question.

Celsius' assets dropped as a result of the severe volatility, and the freezing of customer accounts was an attempt to stem losses and stabilise the company, according to Nash.

Celsius hopes that the mining effort would assist it in repairing its connection with customers, some of whom sent threats and hate mail to business personnel in the weeks preceding the Chapter 11 filing.

However, a group of equity investors predicted a battle for control of bitcoin mining companies. According to Dennis Dunne, the investors' lawyer, the newly created currencies should be deemed the property of the UK firm that obtained the funding for the mining activity, rather than being dispersed to all Celsius creditors.

Customers may object to Celsius' expenditure on bitcoin mining vendors at a time when their own recovery is in doubt, according to the US Department of Justice's bankruptcy watchdog.


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