The popular investment bank Goldman Sachs is reportedly sourcing funds to purchase Celsius Assets as the crypto exchange is on the brink of bankruptcy. Goldman Sachs plans to raise $2 billion in funding to take advantage of the Celsius situation and buy assets at a discount.
However, the investment giant must wait a while if Celsius decides to file for bankruptcy. Celsius has been advised by the experts handling its liquidation process to file for bankruptcy to prevent the situation from worsening.
Celsius Faces Uncertainties
The exchange is currently struggling to stay afloat after finding itself in the liquidation zone for the first time in its history. The crypto market downtrend has devastated most crypto service providers, and Celsius is unfortunate to be one of them.
As reported by CoinDesk, insiders familiar with the matter revealed that the exchange is set to declare bankruptcy to enable it to offset its obligations to creditors.
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As of May 2022, Celsius has more than $11 billion in assets. This implies that should Goldman Sachs table an offer; it will be paying 20 cents per dollar before it can meet the valuation of Celsius assets.
However, it is not yet known whether the investment bank will use Celsius as a subsidiary or strip the exchange of its structure and sell it to another buyer. Meanwhile, on June 12, rival exchange Nexo tabled an unsolicited offer to purchase Celsius assets, which the exchange rejected.
According to the CoinDesk report, Citigroup has now brokered a deal between Nexo and Celsius. Nexo has more users on its platform than Celsius, with 1.7 million. Moreover, Nexo has a solid liquidity position and is in a good position to acquire any of Celsius’s assets. The collateralized loan portfolio is what Nexo is most interested in buying from Celsius.
Furthermore, Nexo’s proposal to purchase the collateralized loan portfolio might have influenced Goldman Sachs’s move. Investors whose funds are still with Celsius may not find the Goldman Sachs approach interesting enough to hope for.
Will Celsius Cave in Under Pressure?
Celsius is likely looking to officially file for bankruptcy if it is hiring consultants like Citigroup is anything to go by. Here is what the process could be if Celsius finally decides to file for bankruptcy.
After filing for bankruptcy, the exchange would create a schedule detailing how to carry out the repayment plan to creditors. In this case, investors hope to be the first to be settled, but this appears unlikely given the current situation.
In a move that seems to indicate the end of Celsius in the crypto space, the exchange has hired restructuring attorneys to advise on practical solutions to the mounting financial pressure it is facing. Since the news of the restructuring attorneys broke out, Celsius has been silent on the various speculations making the rounds.
Meanwhile, Three Arrows Capital (3AC) is another possible exchange with a high possibility of winding up alongside Celsius.