In a significant development in the crypto industry, the insolvent lender Celsius Network has announced that the Fahrenheit consortium has emerged as the winning bidder to acquire its assets. The assets of Celsius, valued at approximately $2 billion, will now be acquired by Fahrenheit, a consortium that includes venture capital firm Arrington Capital and miner US Bitcoin Corp. This acquisition comes after a rigorous auction process, with the Blockchain Recovery Investment Consortium and rival bidder NovaWulf also in the running.
Under the proposed plan, Celsius’s institutional loan portfolio, staked cryptocurrencies, mining unit, and alternative investments will be acquired by Fahrenheit. To finalize the deal, the consortium is required to pay a deposit of $10 million within three days. Fahrenheit, known for its expertise in blockchain technology and backed by prominent players in the crypto industry, will provide the necessary capital, management team, and technology to establish and operate the new company, referred to as NewCo.
Creditors to Hold 100% Equity in NewCo
Celsius Network has confirmed that the account holders will own 100% of the new equity in NewCo, the entity that will manage the acquired assets. A new board of directors, with a majority appointed by the creditors, will oversee the operations of NewCo. This arrangement aims to ensure the interests of the creditors are protected and that the new entity can successfully navigate the challenges of the crypto industry.
Backup Bid and Regulatory Approval
Additionally, Celsius has secured a backup bid with the Blockchain Recovery Investment Consortium (BRIC), affiliated with Gemini Trust, owned by the Winklevoss brothers. While the acceptance of Fahrenheit’s bid by Celsius and its creditors is a crucial step, the final approval of regulators is still required to complete the acquisition. The sale of Celsius faces potential regulatory roadblocks, as experienced by other players in the industry, highlighting the cautious approach of regulatory bodies towards the crypto sector.
Celsius Bankruptcy and the Evolution of the Crypto Industry
Celsius Network filed for Chapter 11 protection in July, joining the list of crypto lenders affected by the market’s volatility during the COVID-19 pandemic. The auction process initiated by Celsius aimed to find a buyer capable of guiding the company’s lending and mining businesses out of bankruptcy. The collapse of Celsius and other high-profile crypto exchanges and lenders signaled the start of a challenging period for the industry. The acquisition of Celsius by the Fahrenheit consortium reflects the ongoing evolution and consolidation within the crypto space.
Expansion Plans and Challenges Ahead
As part of the deal, the new company will receive a substantial amount of liquid cryptocurrency, ranging between $450 and $500 million. Furthermore, US Bitcoin Corp plans to construct crypto mining facilities, including a new 100 megawatt plant. However, the acquisition’s finalization hinges on regulatory approval, which remains a significant challenge in the current regulatory climate for the crypto industry.
