Goldman Sachs to raise $2 billion to buy Celsius Network assets, reports say

The financial conglomerate Goldman Sachs plans to raise $2 billion from investors to buy the assets of the crypto-lending platform Celsius Network in the event of its bankruptcy. The report, by CoinDesk, cites sources familiar with the matter.

According to the publication, the deal would allow investors to acquire Celsius’s assets at a substantial discount if the platform is declared insolvent.

One of CoinDesk’s sources said the bank is in talks with cryptocurrency funds, distressed-capital structures, and traditional financial firms. Assets acquired under the potential agreement would be managed by the participants in the fundraising.

As of May 2022, Celsius managed assets of nearly $12 billion and issued client loans totaling $8.2 billion.

On June 24, The Wall Street Journal reported that Celsius hired the consulting firm Alvarez & Marsal as an adviser on a potential bankruptcy filing. In the same month the paper reported that the company also engaged lawyers from Akin Gump Strauss Hauer & Feld.

Earlier, journalists told that Celsius hired the financial conglomerate Citigroup to search for a possible solution to the problems arising after the freezing of client assets.

CoinDesk’s sources noted that Akin Gump and Citigroup had advised the platform to declare insolvency.

The news of Goldman Sachs’s interest in Celsius’s assets sparked a buzz in the community. Some viewed it as a positive signal for the industry, as the conglomerate’s move could help avert contagion spreading through the crypto market.

The main market-native risk to Bitcoin/crypto has been contagion.

We’ve now seen FTX strike deals with BlockFi and Voyager Digital, and now Goldman buying Celsius’s assets.

Any concern around these firms has now been broadly alleviated and participants should feel more comfortable.

— Will Clemente (@WClementeIII) June 24, 2022

“The main market risk for Bitcoin and crypto is contagion. We’ve seen FTX strike deals with BlockFi and Voyager Digital, and now Goldman buying Celsius’s assets. Any concerns about these firms have now been broadly alleviated, and participants in the industry should feel more comfortable,” wrote William Clemente, lead analyst at Blockware Solutions.

But not everyone shares this optimism. BitMEX co-founder Arthur Hayes stressed that Goldman Sachs would never risk its own money unless it says so explicitly.

2/

GS is doing what advisory banks do, assemble a bunch of investors, and help them structure the purchase of distressed assets for a phat fee.

— Arthur Hayes (@CryptoHayes) June 24, 2022

“Goldman Sachs does what all advisory banks do — gathers a group of investors and helps them structure the purchase of distressed assets for a huge fee,” he wrote.

Hayes acknowledged that if the deal goes through, the community “may rejoice,” as Celsius clients would be able to withdraw assets and creditors would recover part of their money. In his view, this would restore trust in the industry and provide the momentum needed for market development.

“Any “rescues” should be viewed as marketing stunts until real money arrives, and real depositors cannot withdraw part or all of their funds from insolvent centralized crypto lenders,” he added.

Goldman Sachs is not the first to consider buying Celsius assets. In mid-month, the platform Nexo said it was prepared to buy the competitor’s loan portfolio. Chainge Finance proposed to acquire “certain assets and liabilities.”

Earlier, Simon Dixon, co-founder of the online investment platform BnkToTheFuture, proposed a rescue plan for Celsius Network’s lending service, analogous to Bitfinex’s rehabilitation after the 2016 hack.

The initiative at the time included issuing security tokens, debt financing, and using equity. In his words, investors got “very high profits for the high risk they took.”

Following the news of Goldman Sachs’s fundraising, Dixon urged Nexo to contact the BankToTheFuture team. He stressed that the two sides could offer a better solution together.

Let’s discuss @Nexo — reach out to the @BankToTheFuture team or DM me. We can do better than @GoldmanSachs — let’s put something together for the @CelsiusNetwork community that makes depositors good.

— Simon Dixon (Beware Impersonators) (@SimonDixonTwitt) June 24, 2022

Reuters reported that the securities commissions of five U.S. states have begun reviewing Celsius’s suspension of customer withdrawals on a priority basis began examining the Celsius customer withdrawal suspension, according to Reuters.

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