Celsius Chooses Fahrenheit’s Bid for Bankruptcy Exit

Celsius Chooses Fahrenheit's Bid for Bankruptcy Exit
Table of Contents

In a recent report from Reuters, crypto lender Celsius Network LLC announced its decision to accept Fahrenheit’s proposal as the winning bid for its bankruptcy exit strategy. This development marks a significant step towards Celsius’s recovery and the management of a new entity to be owned by its creditors.

Fahrenheit wins the Celsius bid

According to court filings, the cryptocurrency consortium Fahrenheit emerged victorious in acquiring the insolvent crypto lender, securing Celsius’s assets valued at around $2 billion. As part of the acquisition, Fahrenheit, backed by blockchain-based venture capital firm Arrington Capital, will provide the necessary capital, management expertise, and technology to establish and operate the newly formed company, NewCo.

Celsius stated that the agreement with Fahrenheit entails substantial cryptocurrency holdings worth an estimated $450 million to $500 million, which will be transferred to NewCo. Furthermore, US Bitcoin Corp. plans to construct state-of-the-art crypto mining facilities, including a 100-megawatt plant, to bolster the new company’s operations.

Under the proposed plan, Celsius account holders will become the sole owners of the new equity in NewCo. The company also disclosed that NewCo will be overseen by a new board of directors, a majority of whom will be appointed by the creditors.

Celsius Chooses Fahrenheit's Bid for Bankruptcy Exit

In the coming weeks, Celsius intends to negotiate and file a plan sponsor agreement with Fahrenheit, as well as a backup plan sponsor agreement with the Blockchain Recovery Investment Consortium (BRIC), affiliated with Gemini Trust, owned by the Winklevoss twins.

A Path to bankruptcy exit

The bankruptcy filing by Celsius in July of the previous year sent shockwaves through the crypto industry. Meanwhile, several factors contributed to its fall, including the sharp decline in cryptocurrency prices. The substantial drop, with Bitcoin falling by over 70% in the months preceding the bankruptcy, made it challenging for Celsius to meet its repayment obligations to investors.

Transparency issues also played a role in Celsius’s downfall, as the company failed to disclose the utilization of investors’ funds. The lack of transparency made it difficult for investors to assess the risks associated with Celsius.

The bankruptcy of Celsius represents a significant event in the history of cryptocurrencies, shedding light on the need for responsible risk management and increased transparency within the industry. It further underscores that even well-established and reputable crypto companies must be more sensitive to issues that might ultimately lead to financial troubles.

RELATED POSTS

Follow us on Social Networks

Crypto Tutorials

Crypto Reviews

Ads