Following the bankruptcy process, the assets of failed crypto lender Celsius Network are about to be acquired by a consortium called Fahrenheit. Behind this name you will find a group of bidders led by investment firm Arrington Capital.
Other members of the consortium are crypto mining firm US Bitcoin Corp, Proof Group, Steven Kokinos and Ravi Kaza. As the name suggests, Arrington Capital is led by TechCrunch founder Michael Arrington. Michael Arrington left TechCrunch in 2011.
There were two other competing bidders – Novawolf and the Blockchain Recovery Investment Consortium which included the Winklevoss-owned crypto exchange Gemini Trust.
The plan is to distribute Celsius’ liquid assets to account holders. For illiquid assets like institutional debt portfolio, mining business and alternative investments, they will be managed by a new management team.
According to the court filing, Fahrenheit will receive $35 million per year in management fees, while Celsius creditors will still hold 100% equity of the new crypto entity.
As a reminder, Celsius Network filed for bankruptcy in July 2022. At its peak, Celsius was one of the largest crypto lenders, reaching a valuation of $3.25 billion.
Following the collapse of Terraform Labs, the company behind the Terra USD (UST) and Terra (Luna) cryptocurrencies, Celsius faced a bank run on its assets. At some point, it had to stop all customer withdrawals and file for bankruptcy. The company claimed that it had anywhere between $1 billion and $10 billion in assets and liabilities and that it worked with more than 100,000 creditors.
Recently, New York Attorney General Letitia James filed a lawsuit against Alex Mashinsky, co-founder and former CEO of Celsius Network. Among other things, the AG’s office said Celsius had risky investment strategies and made “false and baseless promises”.
“We are very pleased that our competitive auction process generated a positive outcome for clients, most prominently including hundreds of millions of dollars in lower management fee savings and increased liquid cryptocurrency delivery for Celsius’ clients,” David Burse and Alan Carr, member of the Special Committee of the Board, said in a statement. “We appreciate the strong interest Celsius Platform has received from competitive bidders and look forward to working with Fahrenheit to accelerate restructuring and deliver recovery to creditors.”
In the coming weeks, a new Chapter 11 bankruptcy plan will be filed. This will be subject to the approval of the bankruptcy court. If that is not successful for any reason, the offer from the Blockchain Recovery Investment Consortium (which includes Gemini Trust) will be the backup bid.
