Celsius Named Fahrenheit the Winning Bidder in Its Bankruptcy Auction

Celsius Network disclosed on May 25, 2023 that Fahrenheit LLC had been selected as the successful bidder in the bankrupt crypto lender’s auction, establishing a proposed route for transferring major operating assets into a new company owned by account holders.

The notice was filed at 1:16 a.m. Eastern in the U.S. Bankruptcy Court for the Southern District of New York. It named the Blockchain Recovery Investment Consortium, or BRIC, as the backup bidder. The filing marked a substantive bankruptcy milestone, but it was not a completed sale, confirmed reorganization plan or creditor distribution.

A creditor-owned company was proposed

Under the contemplated structure, Fahrenheit would provide capital, management and technology for a new entity referred to as NewCo. The assets assigned to that business were expected to include Celsius’s institutional-loan portfolio, mining operation, staked cryptocurrency and other alternative investments.

Fahrenheit brought together participants including Arrington Capital, US Bitcoin Corp., Proof Group, Steven Kokinos and Ravi Kaza. Mining was central to its proposal: US Bitcoin was expected to manage the mining business and support construction and energization of additional facilities, including a proposed 100-megawatt development.

Celsius said its account holders would own 100% of NewCo’s equity. A majority of the new board was to be appointed by creditors. Those provisions would have made creditors shareholders in an operating crypto business rather than limiting their recovery to an immediate distribution of liquid assets.

That distinction also introduced risk. Equity in an unlisted, newly reorganized company did not have an established market value on May 25. Its eventual worth would depend on court approval, regulatory compliance, mining economics, management execution and whether the shares could obtain a public listing.

The cryptocurrency figures were proposed capitalization

The Fahrenheit terms contemplated placing between $450 million and $500 million of liquid cryptocurrency into NewCo. That range should not be read as Fahrenheit paying Celsius creditors a $450 million-to-$500 million purchase price. It described proposed capitalization retained within the reorganized business, subject to the definitive plan and allocation mechanics.

Contemporaneous reporting also identified a $50 million management contribution in the revised Fahrenheit proposal and a $10 million cash deposit requirement. These were transaction terms, not evidence that creditors received either amount on May 25.

No reliable recovery percentage could be calculated from the notice. Individual outcomes still depended on claim classifications, asset valuations, litigation, administrative costs and the final distribution structure. Similarly, ownership of all NewCo equity did not mean creditors would recover 100% of their Celsius claims.

The auction result was not final approval

Celsius entered Chapter 11 on July 13, 2022 after freezing customer withdrawals the previous month. The auction sought a way to preserve or monetize assets that remained after the lender’s collapse. Fahrenheit displaced an earlier NovaWulf proposal, while BRIC remained available if the successful transaction could not proceed.

After the May 25 filing, Celsius still needed to negotiate and file sponsor agreements, revise its Chapter 11 plan, circulate an adequate disclosure statement, obtain creditor approval where required and secure confirmation from the bankruptcy court. Regulatory objections could also affect whether businesses involving staking, lending or other digital-asset services could operate as proposed.

The defensible event-day conclusion was therefore narrow: Celsius and its creditors’ committee publicly chose Fahrenheit’s proposal as the preferred restructuring path. The filing did not restore withdrawals, settle creditor recoveries or establish that NewCo would begin operating.

Later context

The broader Fahrenheit-sponsored NewCo transaction was not ultimately consummated in its May 25 form. After later regulatory complications, Celsius shifted to a narrower mining-focused structure. The bankruptcy plan became effective on January 31, 2024, when Celsius began its distribution process and transferred mining assets to creditor-owned Ionic Digital. Those later developments do not change the status of the Fahrenheit proposal on May 25, 2023.