The U.S. investment bank is looking to raise the money to buy up distressed assets from the troubled crypto lender, a Fortune report said, citing people familiar with the matter.

See related article: Celsius said to be hiring restructuring attorneys, exploring financing options

Fast facts

  • A deal would allow investors to buy up Celsius Network’s assets at “potentially big discounts” if the crypto lender files for bankruptcy, Fortune said, citing two people familiar with the matter. 
  • On Friday, the Wall Street Journal reported that Celsius has hired restructuring attorneys from Alvarez and Marsal, in addition to those hired from Akin Gump Strauss Hauer & Feld earlier this month.
  • According to one of the unnamed sources cited by Fortune, Goldman Sachs is gauging the interest of Web 3.0 crypto funds, distressed assets funds, and traditional financial institutions. 
  • Celsius has approached Citigroup to evaluate an offer of purchase from rival Nexo, according to a report by The Block.
  • The Fortune report said that both Citigroup and Akin advocates have advised Celsius to file for bankruptcy. 
  • Celsius halted all withdrawals and transfers amid a liquidity crunch on June 13 and it has been widely speculated that the firm may be at a risk of insolvency.
  • While it is not uncommon for investment bankers to drum up interest citing potential bids, any buyer of Celsius’ distressed assets will have to contend with litigation from customers as well as regulators. 
  • “Celsius is about to be inundated with subpoenas and enforcement actions,” Lee Reiners, the executive director of the Global Financial Markets Center at the Duke University School of Law, told Quartz. 
  • “I’d imagine some SEC subpoenas are coming if they haven’t already arrived,” Reiners told Quartz. “I fully expect some enforcement actions taken not only by the SEC but by state securities regulators as well.”  
  • Texas, New Jersey, Alabama, and Kentucky have already served Celsius with cease and desist letters for allegedly “soliciting or selling” its “Earn Interest Accounts” despite them being unregistered securities.
  • A Celsius spokesperson did not immediately respond to a request for comment outside of normal U.S. business hours. Goldman Sachs could not be reached for comment.

See related article: CEL down over 50% since Celsius Network’s withdrawal freeze