- The restructuring plan calls for the distribution of Celsius’ liquid assets to account holders and the payment of management fees to Fahrenheit.
- The strategy will also allow the new business to reactivate idle cryptocurrency mining equipment, which generates digital currency by processing blockchain transactions.
The assets of bankrupt cryptocurrency lender Celsius Network LLC will be managed by Fahrenheit LLC, a consortium of bidders led by investment firm Arrington Capital, who won the auction to manage the business’s assets. As a result, the acquiree will be reincarnated as a new entity.
Fahrenheit Group also includes crypto mining firms such as Proof Group and US Bitcoin Corp. and entrepreneurs – Ravi Kaza and Steven Kokinos. The consortium, whose agreement was made public, will supply the operating cash, management, and technology needed to reorganize a new business using Celsius’ assets.
Fahrenheit competed against Novawulf Digital Management and a group of bidders supported by the cryptocurrency exchange Gemini Trust Co. in an auction held as part of the process of managing the lender’s assets.
Following the failure of Terraform Lab’s TerraUSD stablecoin, which destroyed about USD 60 billion from the cryptocurrency markets, Celsius filed for bankruptcy in July last year with a USD 1.19 billion deficit on its books. Following the May market crash, Celsius put a hold on withdrawals for a month before being forced to close due to the downturn.
As a result of the cryptocurrency lender’s bankruptcy, Letitia James, the attorney general of New York, filed a lawsuit against Alex Mashinsky, the former Chief Executive of Celsius, charging that he deceived investors out of billions by telling them their money was secure. According to the allegation, deposits in Celsius had once surpassed approximately USD 20 billion.
The restructuring plan calls for distributing Celsius’ liquid assets to account holders and paying management fees to Fahrenheit. Fahrenheit will manage illiquid assets, including the institutional loan portfolio, the cryptocurrency mining industry, and alternative investments.
Board’s Special Committee members, Alan Carr, and David Barse stated, “We are very pleased that our competitive auction process produced a positive result for customers, including, most prominently, hundreds of millions of dollars in lower management fee savings and increased liquid cryptocurrency distributions to Celsius’ customers.”
The strategy will also allow the new business to reactivate idle cryptocurrency mining equipment, which generates digital currency by processing blockchain transactions. This would enable the company to gradually restore its cryptocurrency mining business and resume its revenue generation.
A new Chapter 11 bankruptcy plan will be submitted in the upcoming weeks, pending bankruptcy court approval. If it is rejected, Celsius has a fallback offer with the Blockchain Recovery Investment Consortium, which includes Gemini Trust.