Crypto firms Celsius and Core Scientific settle dispute

Crypto firms Celsius and Core Scientific settle dispute

  • The dispute between the two companies initially arose in October 2022.
  • The Texas-based data center will likely become part of Celsius’ mining operations.

Core Scientific has reached a settlement agreement with Celsius Network, effectively ending a months-long legal dispute. According to an announcement made on 15 September, Core Scientific will sell a Bitcoin [BTC] mining data center to Celsius for $14 million in cash, effectively resolving all ongoing litigation between the two parties.

The data center, based in Texas and valued at approximately $45 million, will be transferred to Celsius’ mining division upon court approval.

The dispute between the two companies initially arose in October 2022 when Core Scientific accused Celsius of failing to meet its financial obligations. In response, Celsius alleged that Core Scientific had not deployed mining rigs as stipulated in their agreement.

This contentious situation led both companies to separately file for Chapter 11 bankruptcy protection in the United States. Core Scientific filed in Texas in December 2022, while Celsius filed in New York in July 2022.

The Texas-based data center will likely become part of Celsius’ mining operations. Although it was nonoperational at the time, the facility had the capacity to supply 215 megawatts to Bitcoin mining rigs.

Chris Ferrero, the CEO of Celsius, noted that crypto mining firm US Bitcoin played a crucial role in facilitating the transaction. Moreover, it was part of a winning bid for Celsius’ assets during the bankruptcy proceedings.

Settlement marks a turning point in legal battle

Celsius Network, with the acquisition of the Cedarvale site, strengthens its commitment to West Texas. Moreover, it expands its self-mining portfolio to a remarkable 300 megawatts.

Chris Ferraro, Chief Restructuring Officer and Interim Chief Executive Officer of Celsius Network, highlighted the collaborative effort between Celsius and US Bitcoin Corp. He expressed satisfaction in settling the litigation and emphasized the company’s focus on expanding Cedarvale’s capabilities.

U.S. Data Mining Group, Inc., doing business as US Bitcoin Corp (USBTC), will take charge of managing the construction of the 215 MW Cedarvale facility.

USBTC, a member firm of the winning bidder in a bankruptcy auction to manage and operate Celsius’ mining assets, will contribute to the growth and optimization of Celsius’ mining business.

Asher Genoot, President and Co-Founder of USBTC, expressed delight at the transaction’s success. He emphasized its significance in enhancing NewCo’s mining division. He reiterated the commitment to deliver added value to the Celsius estate before emergence and their eagerness to lead the development of the Cedarvale assets.

Importantly, this transaction has no impact on Core Scientific’s mining fleet and is not part of its three-year roadmap. The roadmap was publicly disclosed in June 2023.

Both Core Scientific and Celsius had initiated voluntary Chapter 11 restructuring proceedings in different districts. Thus, this agreement is subject to approval in both Bankruptcy Court jurisdictions.

This legal settlement between Celsius and Core Scientific is distinct from the criminal charges brought against former Celsius CEO Alex Mashinsky and former Chief Revenue Officer Roni Cohen-Pavon.

In July, Mashinsky was arrested and has since pleaded not guilty to charges related to fraud and market manipulation. In contrast, Cohen-Pavon entered a guilty plea to four charges on 13 September and is awaiting sentencing, scheduled for December.

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About the Author: Daniel