According to the most recent report on Thursday, June 30th, Bahamian cryptocurrency exchange FTX Derivatives Exchange declined a deal to acquire New Jersey-based crypto loan startup Celsius Network.
FTX had began talks with Celsius about bailing out or acquiring the failing company. However, after investigating Celsius' finances, the trading platform withdrew and chose to end the negotiations.
According to the article, FTX made the move after determining that Celsius' balance sheet contained a “$2 billion hole.” FTX reportedly discovered that Celsius' position is tough to cope with.
Celsius was reported to have $11.8 billion in assets in May of last month, a significant decrease from the $25 billion it had in October of previous year.
Celsius banned all withdrawals, swaps, and transfers between accounts on June 12th due to “extreme” market conditions that looked to have rocked the cryptocurrency industry.
In recent months, the market for digital assets has been roiled by severe volatility as investors flee riskier assets amid fears that aggressive interest rate hikes to curb persistent inflation could send the economy into recession.
Celsius contacted the legal firm Akin Gump Strauss Hauer & Feld LLP earlier this month for advice on potential remedies to its mounting financial problems. In addition, the firm recruited specialists from the consulting firm Alvarez & Marsal to manage its restructuring.
Celsius has been fighting advice from its own lawyers to file for Chapter 11 bankruptcy for weeks, despite facing a cash crisis.
According to reports last Friday, Wall Street firm Goldman Sachs was looking to raise $2 billion from investors to purchase the insolvent crypto lender.
If the crypto lender declares bankruptcy, the planned transaction would allow investors to buy the company at a potentially significant discount.
However, declaring bankruptcy is not the path Celsius would choose. Celsius leaders believe that most consumers would prefer that the problematic cryptocurrency loan firm continue operations rather than face the uphill challenge of bankruptcy.
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