The insolvent cryptocurrency lending company Celsiusย Networkย LLC picks Fahrenheit as its savior. In an notice made on Thursday, May 25, 2023, Celsiusย Networkย LLC officially named Fahrenheit its ticket out of bankruptcy after a year of financial decline for the company.
A competitive three-way auction determined which company would take over Celsiusโ financial burden. The month-long auction began in April 2023 and featured bids from the Blockchainย Tech Recovery Investment Committee (BRIC), Fahrenheit Cryptocurrency Consortium, and cryptocurrency investment manager NovaWulf.ย
Why Did Celsiusย Networkย LLC File for Bankruptcy?
On June 12, 2022, the New-jersey-based Celsiusย Networkย LLC Network notified its stakeholders that it was pausing all withdrawals, transfers, and swaps betwixt customer accounts. The statement came after the company grew increasingly incapable of meeting customersโ redemption requests. Shortly after this notice, Celsiusย Networkย LLC and its affiliates voluntarily filed for Chapter 11 bankruptcy.
The bankruptcy plea, heard and granted in the Unitedย States Bankruptcy Court in New Yorkโs Southern District, allowed the company to search for a buyer through an auction to secure itย canย potentially repay its debtors.ย
Andย once filing for bankruptcy, Celsiusย Networkย LLC had approximately 100,000 debtors and liabilities ranging from $1 โ $10 billion. Conversely, the company only had $167 Million in cash on hand.
What Will Transition From Celsiusย Networkย LLC to Fahrenheit Entail?
Cryptocurrency corporations are still novel concepts. Thisย implies thereย is little legal documentation on how to handle events such as insolvency. Nonetheless, using existing laws on insolvent institutions, plentyย of steps must be followed before Fahrenheit can assume full financial responsibility over Celsius.
The 1st step will be to listen to the courtโs verdict on the bid. Despiteย theย factย that Celsiusย Networkย LLC and its creditors have approved the bid, the Unitedย States Bankruptcy Court that received the appย must give regulatory approval.ย
To gain approval, Fahrenheit, under the governance of the Unitedย States Bitcoinย (BTC) Corp. and Arrington Financialย resources, will have to pay a $10 Million deposit within 3 days. Failure toย doย this will result in the bid being handed over to BRIC, a Gemini Foundation holding company.
Nonetheless, if approved, โFahrenheit will provide the financialย resources, management team, and technology to setย up and operate the new company (NewCo).โ Celsiusโ statement adds that โCelsiusโ account holders will own 100 percent of the new equity in NewCo,โ it stated, adding that NewCo will be overseen by a new board of directors, a bulkย of which will be appointed by creditors.โ
NEW ARTICLE:
Celsiusย Networkย LLC Reveals Fahrenheit, LLC as Winning Bidder to Manage New Entity to Be Owned by Celsiusย Networkย LLC CreditorsWinning bid positions Celsiusโ assets to be transferred to โNewCoโ under new executive leadership. Auction results in the distribution of hundreds of millionsโฆ pic.twitter.com/7SgW9aKbKb
โ Celsians (@CelsiansNetwork) May 25, 2023
Atย thisย stage, Fahrenheit will take control of Celsiusโs institutional loan portfolio. This will include mining units, staked digitalย currencies, and other investments. NewCo. will likewise receive $450 to $500 Million in liquid digitalย currency from Fahrenheit and takeย advantageย of a new 100-megawatt cryptocurrency mining facility supported by Unitedย States Bitcoinย (BTC) Corp.
Will Celsiusย Networkย LLC Account Holders Benefit From Move to Fahrenheit?
Despiteย theย factย that Fahrenheit has isย still to receive legal approval to take over Celsiusย Networkย LLC, the move, if approved, will be a substantial relief for Celsiusย Networkย LLC account holders. Celsiusโ insolvency hindered numerous investors from accessing the funds they invested on the platform. It likewise spelled doom for futureย ofย the the company and its services.
Onย theย otherย hand, through the move, Celsiusย Networkย LLC account holders can retrieve their assets. Inย addition, Celsiusย Networkย LLC services will resume and maybe even makeย better asย aย resultย of extra perks like the cryptocurrency mining facility that comes as part of the bid package.
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