Celsius Network reached a $25 million deal with two large preferred shareholders, ending their litigation over claims on the company’s crypto mining business.
The settlement opens a path to ending a potentially costly fight that has been a key hurdle to its plan to transfer its bitcoin mining business to new managers and compensate customers who have digital currency trapped on the bankrupt platform.
Celsius reached the settlement with WestCap Management and Canadian pension fund Caisse de depot et placement du Quebec. The settlement involves claims over the company’s U.K. affiliate, Celsius Network Ltd., and its assets including the mining business, according to a filing in U.S. Bankruptcy Court in New York on Thursday by Celsius Chief Financial Officer Christopher Ferraro.
The cash will come from the proceeds of a sale of a crypto services business, the court papers show.
The settlement is preferable for Celsius and its customers to avoid expensive litigation that may have resulted in the preferred shareholders winning recovery of several hundred million dollars, Ferraro said in the court papers.
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Earlier this year, Celsius picked a group of investors led by TechCrunch co-founder Michael Arrington to run a reorganized company that will include Celsius’ mining business. Celsius customers will own nearly all of the equity in the reorganized company.
The preferred shareholders had argued they have direct claims over the U.K. affiliate and its assets, while customers’ claims are over Hoboken, New Jersey-based Celsius Network LLC. Judge Martin Glenn in March sided with the shareholders, ruling customers at Celsius didn’t have direct claims on the affiliated business and its crypto mining operation.
Celsius argued that the U.K. affiliate with the mining assets owed billions of dollars to the U.S. side that houses the customer platform. Celsius had hastily moved its customer-facing business from the U.K. to the U.S. in 2021, following pressure from British regulators, while the U.K. affiliate continued to own the mining business and other operations.
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Write to Soma Biswas at soma.biswas@wsj.com