Two sources informed The Block that FTX was interested in arranging a transaction with Celsius but ultimately decided against it due to Celsius’s financial situation.
Two sources familiar with the subject informed The Block that FTX, a crypto exchange operator, considered a transaction with Celsius, a distressed crypto lender, but eventually walked away.
According to insiders, FTX initiated discussions with Celsius about giving financial help or making a purchase but opted against further after reviewing Celsius’s finances. According to one source, Celsius had a $2 billion hole in its financial sheet, and FTX found the firm difficult to work with.
Since halting all withdrawals on June 12 due to “extreme market circumstances,” Celsius has been struggling for survival. Since then, client money has remained frozen. In May, Celsius reported 1.7 million clients and around $12 billion in assets under management.
Due to its financial difficulties, Celsius has stayed mostly quiet. The company’s latest public report was made on June 19, when it outlined its goals “continues to stabilise our operations and liquidity. This procedure will need time.”
The Block recently revealed that Celsius has hired Wall Street titan Citigroup to assist with its financial choices, while the Wall Street Journal stated that the lender is collaborating with restructuring advisors from consulting firm Alvarez & Marsal.
Celsius is rejecting the proposal of its attorneys to file for Chapter 11 bankruptcy, sources familiar with the matter told The Block earlier this week. Instead, the company has been soliciting user support to help it win the internal debate against its own legal advisers.
Alex Mashinsky, CEO of Celsius, started the company in 2017 and accelerated its growth by offering consumers excellent interest rates. The company was able to attract prominent investors, such as the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and the growth equity firm WestCap. It obtained $750 million at a value of $3.5 billion last year.
While FTX has opted to leave Celsius, the exchange is still interested in competitor cryptocurrency lender BlockFi. The Block revealed yesterday that FTX intends to purchase BlockFi altogether after giving the company a $250 million revolving credit line.
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