Celsius Network, the digital asset lender that filed for bankruptcy protection in July last year, has selected Fahrenheit’s bid to restart the business under a new name, NewCo. Fahrenheit is a group of investors that includes Bitcoin mining company, US Bitcoin Corp.; crypto investment firm, Arrington Capital; and technology consulting firm, Proof Group. Steven Kokinos, a former Algorand CEO, and Ravi Kaza, an angel investor, are also part of the group.
Celsius announced the development on Thursday, noting that it also secured a backup bid with Blockchain Recovery Investment Consortium (BRIC), which is a group of investors that fund blockchain firms battered by the crypto market downturn. The agreement includes provisions for the investors to fund a public mining firm potentially to be managed by crypto miner GlobalXDigital.
Fahrenheit to Fund Celsius Reboot
Celsius in a statement noted that Fahrenheit’s winning bid was selected after a court-approved auction process and because of a partnership with the bankruptcy company’s unsecured creditors. The bid proposes to provide the capital, management team and technology needed to successfully establish and run NewCo, which will be owned by Celsius creditors.
The bid selection follows Celsius having folded in June 2022 after initially suspending crypto withdrawals on its platform, citing market volatility. The digital asset lender became insolvent after the Terra-Luna collapse that sent shockwaves across the global crypto industry last year.
In the aftermath of its fall, Celsius has been facing several investigations in the United States and Alex Mashinksy, its Co-Founder, was recently charged with fraud. However, the latest development shows the failed digital lending business is making progress in its effort to reorganize under a new entity.
Customers to Get ‘Hundreds of Millions of Dollars’
Announcing the winning bid, Celsius noted that Fahrenheit’s bid will be executed in accordance with its reorganization plans. According to the plan, NewCo for the benefit of account holders will manage Celsius’ illiquid assets, including its institutional loan portfolio, mining business and alternative investments.
The plan also provides for the distribution of ‘hundreds of millions of dollars of additional liquid cryptocurrency' to Celsius’ customers. Compared to what Celsius called ‘the stalking horse bid’ put forward at the start of the auction process, Fahrenheit’s bid cuts down proposed management fees by hundreds of millions of dollars.
“The winning bid also provides attractive offers for Celsius to immediately energize its mining rigs that are currently inactive and for NewCo to build its mining business over time,” Celsius said, noting that NewCo will be managed by a new Board of Directors mainly appointed by its creditors.
Furthermore, the crumbled digital lender pointed out that 100% of the new equity in NewCo will be owned by its account holders, again in accordance with its reorganization plan.
“In the coming weeks, Celsius intends to negotiate and publicly file a plan sponsor agreement with Fahrenheit, a backup plan sponsor agreement with the BRIC, a revised chapter 11 plan, and a disclosure statement, all of which remain subject to bankruptcy court approval,” the lender explained.
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