Celsius Bankruptcy Struggles Coming to an End as Fahrenheit Clinches Win in Auction

Fahrenheit LLC, a group of investors led by the largest cryptocurrency exchange in the United States, has won the court-approved auction process to purchase insolvent lender Celsius Network.

Fahrenheit will offer the necessary funds, management team, and technology to successfully establish and operate the new company. To clinch the contract, it must also submit a cash deposit of $10 million within three days.

Fahrenheit To Obtain Celsius Assets

The consortium behind Fahrenheit includes US Bitcoin Corp, Proof Group Capital Management LLC, Ravi Kaza, former Algorand CEO Steven Kokinos, and Coinbase.

The organization would acquire Celsius’ institutional loan portfolio, mining company, and alternative investments for the benefit of account holders, according to the court petition. The new firm will be led by a Board of Directors, with creditors appointing the majority of the members.

The distribution of Celsius’ liquid crypto to account holders, settlements with the Custody and Withhold organizations, and the new company’s management of Celsius’ illiquid assets have been stated as the substance of the agreement.

The agreement also calls for the new business to receive $500 million in liquid bitcoin, which may be reduced to $450 million if secondary market acquisitions are made. The Fahrenheit group’s US Bitcoin Corp will be in charge of constructing a variety of cryptocurrency mining facilities, including a new 100-megawatt plant.

David Barse and Alan Carr, members of the Special Committee of the Board, commented on the lengthy auction process:

“We are delighted that our competitive auction process resulted in a positive outcome for customers, including hundreds of millions of dollars in lower management fee savings and increased liquid cryptocurrency distributions to Celsius’ customers.” We appreciate competing bidders’ strong interest in the Celsius platform and look forward to working with Fahrenheit to speed the restructuring and distribute recoveries to creditors.”

Meanwhile, Celsius has obtained a backup offer with the Blockchain Recovery Investment Consortium for the “creation of a pure play, publicly traded mining business.” With a potential management contract with GlobalXDigital and an orderly winddown of its remaining assets, the creditors of the failed lender will obtain 100% of the equity interests.

The Celsius Debates

The latest step came over a year after Celsius sought Chapter 11 bankruptcy protection. According to reports, the New Jersey-based corporation has over 1.7 million registered users and approximately 300,000 active users with account balances greater than $100.

Celsius had come under fire for poor record-keeping and evident flaws in its internal processes since declaring bankruptcy. Its founder, Alex Mashinsky, was accused of cheating investors out of billions of dollars in cryptocurrency by concealing the platform’s declining health.

Mashinsky responded to the claims by claiming that the complaint “parrots misinformation” about him and Celsius Network and “borrows others’ baseless conclusions.” He filed a defense request to have the complaint against him dismissed.