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The deal is yet to be finalized as an initial deposit is expected within the next ten days.
It is a good day for the embattled crypto lender Celsius Network as crypto consortium Fahrenheit LLC has won the bid to acquire the insolvent firm whose assets were previously valued at $2 billion. According to a May 25th court filing, the Arrington Capital-backed group emerged as the successful bidder after beating NovaWulf Digital Management.
Markedly, Fahrenheit is a conglomerate of buyers which include venture capital firm Arrington Capital and miner US Bitcoin Corp. The Blockchain Recovery Investment Consortium (BRIC), another corporation that comprises VanEck Absolute Return Advisers Corp and GXD Labs, became the backup bidder.
The deal is yet to be finalized as an initial deposit is expected within the next ten days after which Fahrenheit will receive the insolvent exchange’s institutional loan portfolio, staked cryptocurrencies, mining unit, as well as other alternative investments. Specifically, the new company will receive between $450 and $500 million in liquid cryptocurrency while US Bitcoin Corp will construct crypto mining facilities including a befitting 100-megawatt plant.
If the deposit agreement is not fulfilled within the stipulated time frame, the bid will be transferred to BRIC as NovaWulf has lost out. Also, the bid still requires regulatory approval before the acquisition can be completed. Meanwhile, bankruptcy court Judge Martin Glenn had once mentioned possible regulatory obstacles that may hinder the acquisition of Celsius similar to the case of Binance Exchange and Voyager Digital.
In the coming weeks, the Celsius Network would work on negotiating and publicly filing a plan sponsor agreement with Fahrenheit, and a backup plan sponsor agreement with BRIC. It would also draft a revised version of its Chapter 11 plan and a disclosure statement, but at the same time, all these are subject to bankruptcy court approval.
The auction of Celsius Network’s assets attracted several reputable crypto-related entities including American cryptocurrency exchange Coinbase Global Inc (NASDAQ: COIN), and privately run crypto custodian Gemini Trust.
NovaWulf Proposal to Celsius Precedes Fahrenheit LLC’s
From the initial stage, it looked like NovaWulf had the most leverage owing to its outstanding promises to borrowers.
The digital asset investment manager promised as much as 85% returns to borrowers who had collateral to Celsius Network for moving accounts to the NovaWulf platform, according to a proposal submitted earlier. However, the borrowers would have to hold the loan collateral on a new NovaWulf platform for an additional five years.
Other Celsius creditors were also billed to receive a refund via tokenized equity on the Provenance Blockchain. While it seemed like an interesting proposal, it is worth noting that it is quite an unpopular strategy within the crypto ecosystem. Consequently, some Celsius borrowers were not comfortable with the proposal. Most of them were concerned about whether the new venture will survive long enough to fully repay their collateral.
Private equity giant Apollo Global which also planned to acquire the assets of the bankrupt crypto exchange in partnership with the same Provenance Blockchain turned out to be an investor in the bid submitted by NovaWulf.