Illustration by Angela Zillich.
We're seeing many consolidations during this bear market. Recently, Binance won the race for Voyager Digital, and then they gained controlling interest of Indonesia's Tokocrypto. Now there are rumors going around that Binance are targeting crypto lender Celsius Network that filed for bankruptcy bank in July 2022. The rumors gained some credibility after a tweet from Tiffany Fong:
Crypto lender Celsius was granted an extension by a bankruptcy court to submit a Chapter 11 reorganization plan by February 15, 2023. Chapter 11 plans outline how a bankrupt company intends to raise funds to pay creditors.
Celsius, filed for bankruptcy on July 13, requested an extension of its exclusivity period to explore "value-maximizing" options before submitting its plan. Judge Martin Glenn approved the extension, allowing Celsius to work on developing a stand-alone business and considering other options for restructuring during this time. During this period, Celsius has received a number of bids for its retail platform and crypto mining businesses. The terms of the bids have not been disclosed, but they included offers for the retail platform, the crypto mining business, and a combination of the two. The pool of potential buyers includes 30 parties. Celsius advisers have not yet decided whether to sell the company as a whole, in pieces, or pursue a different restructuring plan. They plan to work with potential buyers in the coming weeks to improve existing bids and announce in mid-January whether a sale will take place, according to company lawyer Chris Koenig.
As of November 25, Celsius held crypto assets worth $2.6 billion, but there is a $1.2 billion gap between the value of its assets (including non-crypto) and its total debts. Despite this, the company's crypto mining operations have generated positive operating cash flow every month this year, according to Interim Chief Executive Officer Chris Ferraro, who also indicated that the company is continuing to build out the mining business.
Celsius has struggled to raise sufficient funds from investors and sell gains from its mining operations to pay off its creditors, who are owed several billion dollars.
Crypto winters often result in the downfall of weaker players, both when it comes to networks and crypto exchanges. As we've seen, the collapse of many large, centralized players has led to a long line of bankruptcies. This in turn has set the stage for mergers and acquisitions in the crypto sector, something that could potentially reshape the competitive landscape.
Financial services firm Goldman Sachs is reportedly seeking to invest millions in the acquisition or investment of crypto firms while prices are low. The firm is currently evaluating opportunities that are "priced more sensibly" and is conducting due diligence on some crypto companies. As a result, institutional investors like Goldman Sachs are looking for opportunities to buy and invest at lower prices while the effects of the FTX collapse lower valuations.
However, if we believe the rumors that Binance bidding on Celsius Network, then there won't be much a reshaping of the competitive landscape. With every acquisition they make, they're inching closer and closer to complete monopoly. The more time passes after the FTX collapse, the more it looks like Binance will be the greatest winner during this crypto winter. Even before the FTX collapse, Binance had 55.1% of the spot trading volume in the world. With every failed exchange, Binance is gradually improving their share of total spot trading volume.