Following a bankruptcy process, the assets of failed cryptocurrency lender Celsius Network are about to be acquired by a consortium called Fahrenheit. Behind this name is a group of bidders led by investment company Arrington Capital.
The other members of the consortium are crypto mining company US Bitcoin Corp., Proof Group, Steven Kokinos and Ravi Kaza. As the name suggests, Arrington Capital is led by Michael Arrington, the founder of MinRegion. Michael Arrington left MinRegion in 2011.
There were two other bidding rivals – NovaWulf and the Blockchain Recovery Investment Consortium involving Winklevoss-owned crypto exchange Gemini Trust.
The plan is to distribute Celsius’ cash to account holders. As for illiquid assets, such as the portfolio of institutional loans, mining operations and alternative investments, they will be managed by a new management team.
According to the court filing, Fahrenheit will receive $35 million a year in management fees, while Celsius’s creditors will still own 100% of the new crypto entity’s equity.
As a reminder, Celsius Network filed for bankruptcy in July 2022. At its peak, Celsius was one of the largest cryptocurrency 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 suffered a bank run on its assets. At one point, it had to suspend all customer withdrawals and file for bankruptcy. The company claimed it had anywhere from $1 billion to $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. The AG’s office said, among other things, that Celsius had risky investment strategies and made “false and baseless promises”.
“We are thrilled that our competitive auction process has produced a positive outcome for clients, including, most notably, hundreds of millions of dollars in lower management fees and more liquid cryptocurrency distributions to Celsius clients,” David Barse and Alan Carr, members of the the council’s special committee, it said in a statement. “We appreciate the strong interest the Celsius platform has received from competing bidders and look forward to working with Fahrenheit to expedite the restructuring and pay recoveries to creditors.”
A new Chapter 11 bankruptcy plan will be filed in the coming weeks. It will be subject to bankruptcy court approval. If for some reason that fails, the offer from Blockchain Recovery Investment Consortium (in which Gemini Trust is involved) will be the backup offer.