Crypto lender Celsius is betting on its mining operation to help it reorganize as creditors and customers look to recoup $5 billion from the firm
- Celsius received approval to expand its mining operations as it looks to reorganize and pay back creditors.
- Prospects still look grim for Celsius' customers, as the lender only holds $170 million in cash.
Celsius Holdings unveiled a plan to reorganizes its finances and hack away at $5.5 billion in obligations, by mining more bitcoin through its subsidiary, Celsius Mining, with the firm receiving approval for an expansion in a bankruptcy court hearing on Monday.
The crypto lender's troubles became public in June, when it paused customer withdrawals shortly before filing for Chapter 11 bankruptcy in early July. Currently, Celsius has around $5.5 billion in liabilities – $4.7 billion of which is customer holdings – and only $170 million in cash on hand, CoinDesk reported.
That debts owed to its users have spurred hate mail and death threats as customers lose faith in getting their deposits back, according to the Wall Street Journal. Now, the lender has proposed trying to pay down debt by significantly ramping up mining operations. After presenting a 61-page plan yesterday, the crypto lender got a green light to spend $5 million more dollars to triple its mining rigs in operation, with 43,000 units currently working and plans to have 112,000 in operation by mid-2023.
Some officials have expressed skepticism about the plan. A US Trustee Program attorney suggested the Celsius should pursue liquidation, noting that the company still needed to pay duties for 37,500 mining rigs, which are currently inoperable and held by customs authorities.
Celsius' legal team defended the expansion and asserted its potential for profitability. "In a world where the crypto market rebounds, the mining business has the potential to be quite valuable," the company's lawyer said.
The prospects don't look promising for Celsius' customers, who run a major risk of losing their funds held with the firm. Celsius lost billions in assets since the crash of the stablecoin Terra and its related crypto Luna.