What’s the future of the Celsius crypto network?
2022 was a tumultuous year for cryptocurrency firms as they navigated a deadly winter with fierce crypto contagion. Celsius, a crypto lending firm, was among the first to get deeply affected and thrown in the towel by filing bankruptcy in mid-2022.
The Celsius bankruptcy case is nearing its conclusion as it has chosen a bidder to acquire its assets.
In this article, we will explore the firm's future and what developments are expected in its offerings.
Fahrenheit wins the bidding war for Celsius assets
Fahrenheit's crypto consortium won the bidding war and acquired the bankrupt firm's assets on 25 May, 2023.
It needed to deposit $10 million in cash within three days to acquire $2 billion worth of digital assets. These assets include staked cryptocurrencies, the mining unit, a loan portfolio, or any other investments of the Celsius crypto network.
The Fahrenheit consortium includes two buyers; Arrington Capital, the venture capital firm, and the US Bitcoin Corp, a miner. It competed against NovaWulf and the Blockchain Recovery Investment Consortium (BRIC). Coinbase, Gemini, and Goldman Sachs were also interested in the Celsius acquisition earlier.
Initially, NovaWulf was the top contender to acquire the assets, but its bid eventually lost. Meanwhile, the bankrupt lending firm has chosen BRIC as its backup. BRIC comprises Van Eck Absolute Return Advisers Corp and the GXD Labs. So, if Fahrenheit does not come through, there will be a backup for the lending firm.
A background of Celsius crypto network bankruptcy
Celsius was one of the leading lenders in the crypto world in 2021. However, its involvement with Terra was risky for the firm and its users. In June 2022, after the Terra-Luna collapse, Celsius halted withdrawals, swaps, and transfers as a speculation of the market. Later, it also faced accusations from ex-employees of fraud.
In July 2022, it finally filed for Chapter 11 bankruptcy in the US court. The decision was made after the lender went through a run as its withdrawals surged. The firm's collapse proved quite dreadful for the cryptocurrency market and affected many other venture capital companies, exchanges, and lenders.
The lender formally began its auction in April 2022 to find a suitable buyer to guide it out of insolvency. And now Fahrenheit consortium might be able to manage its lending and mining businesses.
Will Celsius customers get their money back?
Justice Martin Glenn, who was hearing the bankruptcy case, had announced in March 2023 that the Celsius users might receive a percentage of their deposited assets back. According to a report by CryptoPotato, eligible customers may receive up to 72.5% of their funds back.
The Custody account holders can claim their money, but the Earn investors are not eligible. If the customers want a complete 100% refund, they have the option of further litigation. Others can claim their funds in two parts, both consisting of 36.25%. Account holders can claim the first part upfront, whereas the second part can be received by the end of 2023 or in 2024.
The Fahrenheit consortium will assist the refund procedure. It would provide its management team and capital to distribute the funds to account holders.
Will the Celsius crypto recover?
As of writing, the CEL token's price is $0.2157 only, which has dropped by more than 70% within a year. The token was trading at $8.02 in 2021, but the market downturn of 2022 affected its price.
The acquisition by Fahrenheit might bring an end to the insolvency struggles of the network. However, the future of Celsius crypto remains uncertain.
The main reason behind it is the debts of the firm and its reputation. As of now, the NewCo has to deal with the debts first and refund the customers, so more investments in its crypto are unlikely. Besides, investors are hesitant to invest in the CEL coin because of the overall image of the cryptocurrency lenders in the market.
Author: Wasay Ali
Wasay Ali is a versatile professional writer with global experience and a background in mechanical engineering and social science. He is adept at crafting news and informational content for the crypto space and has experience writing for other niches. He is a professional SEO content writer who has worked with several digital marketing agencies and clients in the US, UK, Pakistan, and Europe. He is a dedicated volunteer and enjoys reading, writing, poetry, and going to the gym. He is an INFJ-A personality type dedicated to positively impacting the world. Wasay has a passion for writing as it allows him to express his creativity, share his knowledge, and connect with people worldwide.