- Bankrupt crypto lending provider Celsius is grappling with billions of dollars in claims from various parties.
- Simon Dixon has disclosed the estimated prices Bitcoin and ETH would need to reach for Celsius to repay all USD claims and preserve other assets.
- In June, Celsius filed a motion with the court to convert all alternative cryptocurrencies to Bitcoin and Ethereum.
According to a new report from investment firm Bank of the Future, bankrupt Celsius could potentially repay its debts depending on the prices of Bitcoin and Ethereum.
Celsius Struggles with Billions of Dollars in Debt
Bankrupt crypto lending provider Celsius is facing billions of dollars in claims from various parties. According to a new estimate from Bank of the Future, the troubled crypto lending provider could potentially repay its USD claims if the current prices of its two held assets, Bitcoin and Ethereum, were to double.
Simon Dixon, the founder of crypto-focused investment firm Bank of the Future, disclosed the estimated prices Bitcoin and ETH would need to reach for Celsius to repay all USD claims and preserve other assets.
Based on the final agreement with the Fahrenheit group, which won the bid to acquire Celsius assets in May, Celsius could repay all claims resulting from the price appreciation of both assets when the BTC price reaches $54,879 and the ETH price reaches $3,750.
In June, Celsius filed a motion with the court to convert all alternative cryptocurrencies to Bitcoin and Ethereum, aiming to maximize the value of its assets. This request was approved by the court.
Dixon noted that these estimates are “informed guesses” made by the internal investment banking team at BF. The new restructuring plan proposed by Fahrenheit includes approximately $1.4 billion in mining, corporate loans, and investments, along with $450 million in liquid crypto assets.
BF also shared a comparison between Fahrenheit’s rescue plans and BRIC’s liquidation plans. The total recovery under regular liquidation amounts to $3,519 million, exceeding the current total assets of $3,417 million. This discrepancy is accounted for by variable costs.
The approximate return to retail creditors amounts to $339 million. According to BF’s estimates, the recovery rate for both options is approximately 65%, which could increase up to 75% assuming 10% of claims are not accepted. Under the Fahrenheit Plan, 41.4% of the recovery occurs in equity, while the remaining 58.6% is in liquid crypto assets, whereas under BRIC’s regular liquidation, only 12.4% of the recovery is in equity, with the remaining 87.6% in liquid crypto assets.
Dixon noted that creditors would have to fight to exit the bankruptcy process before the end of 2023 or before reaching the estimated BTC and ETH levels, stating that “if there is a fakeout, we will have to fight it aggressively to avoid another withdrawal situation.”
