Key Takeaways
- Goldman Sachs has teamed up to support the struggling crypto lending company Celsius.
- If Celsius files for bankruptcy, Goldman plans to raise $2 billion to purchase its troubled assets. Investors may include distressed investors, traditional asset managers, or crypto funds.
- Both Citigroup and Akin Gump have advised Celsius to declare bankruptcy.
In what would be the largest effort to date by a traditional financial institution to intervene during a general crypto downfall situation, as per people with knowledge of the situation, Goldman Sachs is attempting to raise $2 billion from investors to purchase troubled assets from struggling crypto lender Celsius.
In the event that Celsius filed for bankruptcy, the proposed deal would enable investors to purchase its assets at possible significant discounts, according to the sources. Alvarez & Marsal, a restructuring advisory firm, has been hired by Celsius, according to a Friday afternoon Wall Street Journal report.
Should Celsius be forced to declare bankruptcy, it might be necessary to quickly liquidate its assets in order to settle any debts. According to reports, Citigroup and Akin Group have already advised the exchange to declare bankruptcy. However, Citigroup opted not to respond. An inquiry for comments was not immediately answered by Akin Gump.
In a surprise announcement on June 12, Celsius, which as of May this year had more than $8 billion lent to clients and $12 billion in assets under management, said it would no longer allow withdrawals from its platform due to “extreme market conditions.” These circumstances were made worse by the disclosure, which briefly caused bitcoin to trade below $20,000.
The lending company held staked ether, or stETH, which has also experienced liquidity issues amid a broader crypto crash, as well as an unknown amount of UST, the stablecoin that crashed after losing its peg to the dollar.
Celsius also garnered an objectionable offer from the competing exchange Nexo, which was rejected. To evaluate the deal, Citigroup had been enlisted. 1.7 million people claimed to be using Celisus while Nexo has over 4 million users.
Nexo is well-positioned in terms of liquidity and equity to quickly acquire any remaining qualifying assets of Celsius, primarily their portfolio of collateralized loans.
Similar to any prospective Goldman Sachs offer, the proposal to buy Celsius’ “collateralized loan portfolio” is likely to have a similar focus. Investors who are presently unable to access their money that is being held in custody by Celsius may not be enthusiastic about Goldman Sachs’ strategy.
Goldman Sachs appears to be gauging interest and requesting promises from Web3 crypto funds, funds specialising in distressed assets, and standard finance institutions with plenty of cash on hand.
Last year, Celsius raised $750 million from investors, including Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest pension fund, valuing the company at $3.25 billion.
