The Celsius bankruptcy auction is set for Tuesday
Bruno de Carvalho—SOPA Images/Sipa USA/Reuters
The sale of Celsius — the crypto lender that sought a valuation of more than $7 billion when it collapsed last June — took a series of twists and turns this weekend as a bankruptcy filing revealed that two new consortia will participate in a three-way auction for the company set for this Tuesday.
According to the filing, one of the new groups seeking to take over Celsius Fahrenheit is backed by well-known venture capitalist Michael Arrington along with the former CEO of blockchain project Algorand and investment banker Ravi Kaza. The other is called the Blockchain Recovery Investment Committee and is backed by the likes of Gemini Trust – owned by the Winklevoss twins – and fund manager VanEck, which is seeking to create a crypto ETF.
The emergence of these two new bidders comes after rumblings about an initial proposal made by asset manager NovaWulf, which has been selected as the so-called stalking horse bidder – a role that gave it an inside track to take over Celsius.
There’s a lot at stake for Celsius’ more than 600,000 creditors since the outcome of the auction will determine how and when they get paid, and whether the company will be a going concern when it emerges from Chapter 11, which it entered last year summer. At the time, Celsius owed customers $4.7 billion.
The NovaWulf plan would see small creditors, most of whom were Celsius customers who had deposited under $5,000 on the platform, get around 70% of their money back, according to a recent report from Coindesk. The remaining creditors would recover in the form of tokenized equity on something called the Provenance Blockchain, which is an obscure project even in crypto circles.
According to a person familiar with the project, the new bidders will be superior to NovaWulf because they are backed by veteran crypto operators who are likely to extract more value by operating rather than liquidating the bulk of Celsius’ assets.
These assets include a loan book, stakes in a number of venture capital-backed startups, and a large fleet of crypto mining machines that could, in theory, be revived and provide immediate returns for the new owner.
The auction is set for Tuesday
In its weekend filing, law firm Kirkland & Ellis — which is overseeing the bankruptcy — said the three-way auction will begin Tuesday at 2 p.m. at its Manhattan office.
Customers and creditors are anxious for the process to begin, not only because it would be a big step forward in getting their money back, but because the bankruptcy process has already eaten away millions of dollars of Celsius’ remaining assets.
It is not clear who has the best chance of winning the bidding, although the Fahrenheit team could benefit from having industry giant Coinbase as part of the consortium.
On Saturday evening, Celsius tweeted news of the filing and Arrington subsequently posted a series of tweets about Fahrenheit’s involvement, including one about Coinbase’s participation that he has since deleted. Coinbase declined to comment on the tweet, but did not deny involvement.
The winner of the auction, which could take several days to play out, is likely to emerge later this week.
Celsius’ emergence from bankruptcy will be another watershed for the crypto industry as it tries to recover from a disastrous year that saw many high-profile companies imploding and revelations that several once-respected industry leaders had engaged in fraud. These include Celsius founder Alex Mashinsky, who is the target of a New York state lawsuit accusing him of hiding risky investments while assuring customers the company was as safe as a bank.
