Bankrupt Celsius Aims to Raise $14.4 Million From Bitcoin Mining Rig Credits and Coupons
Defunct cryptocurrency lender Celsius is seeking more than $14 million in loans and coupons backed by Bitmain, according to interim CEO Christopher Ferraro in a Feb. 9, 2023 bankruptcy court filing. Ferraro said in a statement that “coupons do not currently provide utility to the debtor’s mining business.”
Interim Celsius CEO Outlines Plan To Raise Funds With Bitmain Loans And Coupons
The bankrupt cryptocurrency lending firm is looking to raise $14.4 million from Bitmain’s million-dollar cache of loans and coupons, according to Christopher Ferraro, acting CEO of Celsius. The company intends to sell $7.4 million in coupons and $7 million in credits. Bitmain coupons offer the holder a 10-30% discount on future purchases from the company, while the credits provide owners with a 100% cash redemption of face value from the mining equipment manufacturer .
“I do not foresee that debtors will be interested in using Bitmain coupons to purchase mining rigs,” Ferraro wrote in litigation. “Therefore, Bitmain coupons do not benefit debtors’ property, as debtors do not intend to use these Bitmain coupons to purchase new mining rigs before they expire. On the other hand, the sale of Bitmain coupons will allow debtors to realize about $7.4 million at a time when liquidity is needed most,” added the interim Celsius CEO.
The value of Bitmain coupons in the secondary market decreases significantly as the expiration date of Bitmain coupons approaches, with the rate of depreciation increasing as expiration approaches.
The interim CEO of Celsius said the debtors are currently in talks with “six potential buyers”. While Bitmain credits do not have an expiration date like coupons, they are non-transferable due to Bitmain’s 2023 updated terms of service that limit credit transfers. “Because Bitmain loans cannot be transferred directly, the debtors plan to use the loans to purchase mining rigs on behalf of third-party buyers,” Ferraro told the court. This third-party approach will allow Celsius to “realize approximately 85-88% of the face value” of Bitmain loans.”
Ferraro argues that it would be unwise to keep Bitmain’s loans due to the potential loss of value due to energy and bitcoin price fluctuations, as well as the possibility that Bitmain could change the rules for using these loans. Ferraro sees this as a “golden opportunity” for debtors to sell loans for immediate liquidity, rather than keep something that may not ultimately be of value to them in the long run.
What do you think of Celsius’ plan to raise funds with Bitmain credits and coupons? Share your thoughts on this in the comments section below.
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