September 24, 2023

Goldman Sachs may Buy Distressed Assets from Crypto Lender Celsius


On June 12th, the crypto market was delivered a surprise when crypto lender Celsius Network announced that it was halting its withdrawal and transfer services between accounts. Two days later, a report in the Wall Street Journal (WSJ) said that the company was seeking the services of restructuring attorneys. The report said that the lender wanted to use the services of law firm Akin Gump Strauss Hauer & Feld LLP, which specializes in restructuring and bankruptcy. A new report from the WSJ later said that it was working with Alvarez & Marsal, a restructuring advisory company.

Celsius is in trouble

Since the announcement by Celsius Network on June 12th, there have been rumors flying around about the crypto lender’s insolvency and its current financial status remains unknown. On June 13th, another crypto lending firm Nexo made an offer to purchase the assets of Celsius. It is understood that the announcement of the company to stop withdrawals, transfers and swaps on its platform and citing market conditions for it will raise red flags.

There has also been speculation that 17,919 WBTC that was leveraged in Maker protocol had been liquidated. Things got worse after the WSJ report about Celsius looking for services of a restructuring law firm. Sources close to the matter had first said that Celsius had first reached out to investors in order to get help.

Goldman Sachs may step in

Tracy Wang from Coindesk posted that two people with knowledge of the matter had disclosed that Goldman Sachs was looking into purchasing the distressed assets of Celsius Network. The report from Wang said that Goldman Sachs was raising $2 billion from its investors for this purpose. The deal would enable investors to purchase assets of Celsius Network at solid discounts in the event of the crypto lender filing for bankruptcy.

There were also reports that the US Securities and Exchange Commission (SEC), along with a number of regulators in different states in the country were investigating the crypto lending company because of its account freeze. There were also rumors that Citigroup, the financial giant, along with Akin Gump, had told Celsius Network that its only option is to file for bankruptcy.

Trouble in the crypto market

The problems for Celsius Network come at a time when there is widespread trouble in the crypto market. It is currently experiencing a massive downturn, with almost all cryptocurrencies losing their market value and the overall market seeing its market capitalization fall under $1 trillion.

The collapse of the TerraUSD coin wreaked havoc in the crypto space and this has also worsened the liquidity problems that Celsius is facing, given the crypto lending platform’s exposure to the stablecoin. After pausing its withdrawals, the company has mostly gone silent on what is happening and this has angered and frustrated its users because they are unable to access their funds. After Celsius, Babel Finance also made a similar announcement, and 3AC may also file for bankruptcy, which has sparked worries of a crypto contagion.

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