Celsius has been struggling behind closed doors recently, and yesterday’s one-two punch of news shows this. Between an executive’s decision to step down and an audio leak revealing the company’s long shot to satisfy users, the company itself doesn’t seem confident in its reorganization plan. But could there be a hero ready to step in? It appears that crypto giant FTX is ready to open its wallet again and continue its bailout streak if given the okay.
Celsius is in hot water, and it’s not just due to bankruptcy. Last month, the company started facing accusations and lawsuits that are hampering its attempt to reorganize. A company’s claims that Celsius mismanaged funds and tried to underpay partners has led to a PR fiasco. A lawsuit pertaining to these accusations is also drawing resources away from the company’s debt repayment plan, especially as Celsius decides to countersue.
More recently, the company has also been forced to deal with a major departure. Celsius’s founder and chief executive, Alex Mashinsky, suddenly resigned from his position as CEO yesterday. Luckily, the decision doesn’t mean Mashinksy is departing the company entirely — he says he will continue in a director role at Celsius. However, without a replacement or an explicit transition plan, investors wonder how suddenly the decision comes, even internally.
And atop all of this, newly leaked audio from an internal meeting suggests that the company’s crypto mining venture may not prove sufficient to elevate the company out of debt. It appears that Celsius is preparing an “IOU” token for customers whose assets are frozen still, with the anticipation that many will redeem the tokens for less than face value simply to finally get their assets back.
FTX Could Offer Celsius a Lifeline With Buyout Offer
Celsius has a long way to go if it hopes to get itself out of debt, and investors see its crypto mining scheme as far-fetched. But, the company could find a lifeline through FTX, which has deep coffers and a desire to buy up Celsius’s assets.
An insider told Bloomberg yesterday that FTX founder Sam Bankman-Fried has an increasing interest in buying the remaining Celsius assets from the company. It is yet unclear whether the bid would come through FTX or Bankman-Fried’s other company, Alameda Research.
This news wouldn’t come as a surprise if Bankman-Fried were to really tender an offer to Celsius. FTX has been stealing a lot of the spotlight in the crypto market recently. This is due mostly to the aggressive bailout strategy it has taken in the wake of the crypto crash. Already, the company has secured an agreement to buy embattled BlockFi.
And more recently, it won the auction to purchase the assets of Voyager Digital, one of the three companies who, alongside Celsius, fell into bankruptcy after the crypto crash this summer. And, as Bankman-Fried himself reports, the company has plenty of cash left in the tank to resume this trend. So, the new report doesn’t feel empty.
Celsius could certainly use the help. As its newly revealed token plan suggests, it does not seem as though the company’s mining plan will be enough to pull Celsius out of debt. The company is expected to run out of money by next month, and its mining facility isn’t even fully completed or operational.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.