A group backed by Arrington Capital will acquire the assets of Celsius
Following a bankruptcy process, the assets of bankrupt crypto lender Celsius Network are set to be acquired by a consortium called Fahrenheit. Behind this name you will find a group of bidders led by the investment company 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 Michael Arrington, the founder of TechCrunch. Michael Arrington left TechCrunch in 2011.
There were two other rivals – NovaWulf and the Blockchain Recovery Investment Consortium which involved Winklevoss-owned crypto exchange Gemini Trust.
The plan is to distribute Celsius’ liquid assets to account holders. As for illiquid assets, such as the institutional loan portfolio, mining activities 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 own 100% of the capital 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 cryptocurrency lenders and reached a valuation of $3.25 billion.
After the collapse of Terraform Labs, the company behind the cryptocurrencies Terra USD (UST) and Terra (LUNA), Celsius faced a run on its assets. At one point, he had to suspend all customer withdrawals and file for bankruptcy. The company claimed it had between $1 billion and $10 billion in assets and liabilities and worked with more than 100,000 creditors.
More 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 unsubstantiated promises.”
“We are very pleased that our competitive bidding process has produced a positive outcome for clients, including hundreds of millions of dollars in management fee savings and increased cash cryptocurrency distributions to Celsius clients. “said David Barse and Alan Carr, members. of the special committee of the board of directors, said in a press release. “We appreciate the strong interest the Celsius platform has generated from competing bidders and look forward to working with Fahrenheit to expedite the restructuring and distribute recoveries to creditors.”
In the coming weeks, a new Chapter 11 bankruptcy plan will be filed. It will be subject to the approval of the bankruptcy court. If that doesn’t work out for some reason, the Blockchain Recovery Investment Consortium offer (which involves Gemini Trust) will be the fallback offer.