Fresh from winning an auction to acquire the assets of now-defunct crypto brokerage firm Voyager Digital Ltd., the U.S. arm of FTX Trading Ltd. is reportedly considering bidding for the assets of bankrupt cryptocurrency lending platform provider Celsius Network LLC.
The claim comes from Bloomberg, which cited a person familiar with the matter. The report claims that the interest is coming from Sam Bankman-Fried, the founder of FTX, however, it’s not clear whether FTX will make the bid or Bankman-Fried’s trading firm Alameda Research. The same report also claims that FTX is in the process of raising a $1 billion funding round that has not closed yet nor been made public, giving FTX more capital to potentially acquire the Celsius assets.
The idea that FTX could attempt to acquire the assets of Celsius comes as no surprise. A slew of prominent cryptocurrency and blockchain-related companies have gotten into trouble this year due to the crypto winter and FTX has either been considering buying them or actually has.
In July, FTX US signed a deal that gave them the option to buy cryptocurrency lending firm BlockFi Inc. for up to $240 million. BlockFi was once a darling of the cryptocurrency lending world, having raised $350 million on a $3 billion valuation in March 2021, but the wheels fell off as the price of cryptocurrencies crashed. FTX provided a $250 million line of credit to BlockFi in June to “navigate the market from a position of strength,” but the company, like many in the space, continues to struggle.
Forward to earlier this week and FTX US won an auction to buy Voyager’s assets for $1.4 billion. Voyager filed for bankruptcy protection on July 6, becoming the second major company to do so in the cryptocurrency market following the collapse of Three Arrows Capital days earlier.
Under the deal, Voyager customers will be able to transfer to the FTX US platform to resume cryptocurrency trading. The purchase agreement is to be presented to the court for approval on Oct. 19. Any acquisition of Celsius assets is likely to follow a similar path.
Exactly what FTX will pay and which assets they could acquire from Celsius is unknown at this time. Celsius has been in trouble since it suspended withdrawals and transfers because of “extreme” conditions on June 13. The company is also subject to an investigation in Vermont which alleges, among other things, that Celcius engaged in unregistered securities offerings by offering cryptocurrency interest accounts to retail investors and that Celsius also lacked a money transmitter license.
The news that FTX may be interested in acquiring assets from Celsius comes a day after Celsius Chief Executive Officer Alex Mashinsky resigned from the company, citing his ongoing role as CEO as becoming an “increasing distraction” for Celsius.
“I am very sorry about the difficult financial circumstances members of our community are facing,” Mashinsky said in a statement. “I will continue to maintain my focus on working to help the community unite behind a plan that will provide the best outcome for all creditors – which is what I have been doing since the company filed for bankruptcy.”
Lacking other credible bidders, a cashed-up FTX may well turn out to be the best outcome for Celsius creditors.