Defunct cryptocurrency lender Celsius aims to obtain more than $14 million of Bitmain-backed credits and coupons, according to interim CEO Christopher Ferraro in a bankruptcy court filing dated Feb. 9, 2023. Ferraro testified at the presentation that the “coupons currently do not provide utility to the mining business of the debtors”.
Celsius Interim CEO Outlines Plan to Raise Funds Through Bitmain Credits and Vouchers
According to Christopher Ferraro, interim CEO of Celsius, the bankrupt cryptocurrency lending firm is looking to raise $14.4 million from a stash of Bitmain credits and coupons worth millions. The company intends to sell the coupons for $7.4 million and the credits for $7 million. Bitmain coupons offer the holder a 10-30% discount on future purchases from the company, while the credits provide owners with a cash back of 100% of the face value of the mining rig manufacturer.
“I do not foresee debtors being interested in using Bitmain coupons to acquire mining rigs,” Ferraro wrote in the court file. “Therefore, the Bitmain Vouchers do not provide any utility to the debtors’ assets because the debtors do not intend to use these Bitmain Vouchers to purchase new mining rigs before they expire. The sale of the Bitmain coupons, on the other hand, would allow debtors to obtain approximately $7.4 million at a time when liquidity is most needed,” added the interim CEO of Celsius.
Ferraro continued:
The value of Bitmain Vouchers in the secondary market depreciates significantly as the expiration date of Bitmain Vouchers approaches, and the rate of depreciation accelerates as expiration approaches.
Celsius’ interim chief executive said the debtors are currently in talks with “six potential buyers.” While Bitmain credits do not have an expiration date like coupons, they are not transferable due to Bitmain’s updated 2023 terms of service restricting the transfer of the credits. “As Bitmain’s credits cannot be assigned directly, the debtors plan to use the credits 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 face value” of Bitmain’s credits.”
Ferraro argues that it would be unwise to hold Bitmain’s credits, due to the potential loss of value from fluctuations in energy and bitcoin prices, and the possibility of Bitmain changing the rules for using these credits. Ferraro sees it as a “golden opportunity” for debtors to sell the loans for immediate liquidity, rather than holding on to something that may ultimately be worthless to them in the long run.
What do you think about Celsius’ plan to raise funds through Bitmain credits and coupons? Share your thoughts on this topic in the comments section below.
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