Defunct cryptocurrency lender Celsius aims to secure more than $14 million from credits and vouchers backed by Bitmain, according to interim CEO Christopher Ferraro in a bankruptcy filing dated Feb. 9, 2023. Ferraro stated in the filing that “the vouchers currently do not provide any benefit to the debtor’s mining operations.”
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 seeking to raise $14.4 million from a cache of Bitmain credits and vouchers worth millions. The company intends to sell the vouchers for $7.4 million and the credits for $7 million. The Bitmain coupons give the holder a 10-30% discount on future purchases from the company, while the credits give owners 100% cash redemption at face value from the mining rig manufacturer.
“I do not envision that the debtors are interested in using the Bitmain tokens to acquire mining rigs,” Ferraro wrote in the lawsuit. “Therefore, the Bitmain Vouchers do not provide any benefit to the Debtors’ estate because the Debtors do not intend to use these Bitmain Vouchers to purchase new mining rigs before their expiration. The sale of the Bitmain Vouchers, on the other hand, would allow the Debtors to realize approximately 7 .4 million at a time when liquidity is most needed,” the Celsius interim CEO added.
Ferraro continued:
The value of Bitmain coupons on the secondary market drops significantly as the expiration dates of the Bitmain coupons approach, with the rate of depreciation accelerating as expiration approaches.
The interim CEO of Celsius stated that the debtors are currently in discussions with “six potential buyers”. While the Bitmain Credits do not have an expiration date like the Vouchers, they are non-transferable due to Bitmain’s updated 2023 Terms of Service which restricts the transfer of the credits. “As the Bitmain credits are not directly assignable, 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 the Bitmain credits.
Ferraro argues that it would not be prudent to keep the Bitmain credits, due to the potential loss of value from fluctuations in energy and bitcoin prices, and the possibility that Bitmain could change the rules for using these credits. Ferraro sees it as a “golden opportunity” for the debtors to sell the credits for immediate liquidity, rather than keeping something that may ultimately have no value to them in the long run.
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Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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