Celsius Network and Core Scientific Settle Litigation

Key Insights:

  • Celsius Network acquired Core Scientific’s Texas mining center for $14 million, resolving all legal disputes.
  • Following the acquisition, Celsius’ self-mining capacity will ramp up to 300 megawatts in West Texas.
  • The settlement, still pending court approval, is unrelated to criminal charges against Celsius’ former executives.

Celsius Network and Core Scientific have resolved after engaging in a legal tussle for several months. Announced on September 15, the settlement involves Celsius acquiring Core Scientific’s Bitcoin mining data center in Texas for $14 million. This significant transaction concludes all pending lawsuits between the two cryptocurrency companies.

A Timeline of Dispute and Resolution

The dispute was initiated in October 2022 when Core Scientific accused Celsius Network of failing to meet its financial commitments. Celsius countered these allegations, stating that Core Scientific had not fulfilled its promise to deploy mining rigs as per their mutual agreement. Consequently, the strained relationship led both organizations to file for Chapter 11 bankruptcy protection—Celsius filed in New York in July 2022 and Core Scientific in Texas in December 2022.

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Chris Ferraro, the Interim CEO of Celsius Network, expressed satisfaction with the outcome. Moreover, he highlighted the instrumental role of US Bitcoin Corp (USBTC) in bringing the transaction to fruition. It should be noted that USBTC, a member of the winning bid during Celsius’ bankruptcy proceedings, will oversee the construction of the newly acquired 215 MW Cedarvale facility.

Asher Genoot, President and Co-Founder of USBTC, also commented on the transaction. He articulated that this marks a vital step forward for their mining operations and emphasized a readiness to manage and optimize the Cedarvale facility.

New Directions in Texas Operations

The acquisition not only resolves the lingering legal issues but also underscores Celsius’ sustained commitment to its operations in West Texas. Following this acquisition, the company’s self-mining capacity is set to increase to a substantial 300 megawatts. USBTC will be at the forefront of constructing and managing this Texas-based facility, indicating a collaborative path ahead for all parties.

However, it’s important to mention that this development does not impact Core Scientific’s current mining fleet or plans, which were publicly shared in June 2023. The company stated explicitly that this sale was not incorporated into their three-year roadmap.

Judicial Approval and Unrelated Legal Matters

The settlement is pending court approval, given that both companies filed for Chapter 11 restructuring in different jurisdictions. Thus, the agreement must secure endorsements from the respective bankruptcy courts before it becomes official.

Additionally, this legal resolution remains separate from the ongoing criminal cases against former executives of Celsius Network. Former CEO Alex Mashinsky faces fraud and market manipulation charges but has pleaded not guilty. Meanwhile, former Chief Revenue Officer Roni Cohen-Pavon pleaded guilty on four counts on September 13 and awaits sentencing later this year.

The $14 million sale between Celsius Network and Core Scientific ends their long-standing legal woes, allowing both companies to focus on operational growth. The acquisition significantly augments Celsius’ mining portfolio and its business in West Texas, whereas Core Scientific continues on its already laid-out three-year path.

Importantly, this development might serve as a precedent for resolving future disputes in the volatile and rapidly changing cryptocurrency industry. As both companies emerge from this settlement, it will be intriguing to see how they navigate their futures in the crypto landscape.

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