Celsius, the bankrupt cryptocurrency lender, is facing challenges under US Chapter 11 bankruptcy law, with multiple parties filing claims totaling billions of dollars. However, a new estimate from Bank of the Future, a crypto-focused investment firm, suggests s that troubled crypto lenders like Celsius could potentially repay these claims if the prices of Bitcoin and Ether rise significantly.
According to Bank of the Future's founder, Simon Dixon, Celsius could repay all claims resulting from the increase in BTC and ETH prices if Bitcoin reaches $54,879 and Ether reaches $3,750. These estimates are based on the definitive agreement with the Fahrenheit consortium, which won the bid to acquire Celsius assets. Celsius had previously appealed in court to convert all of its altcoins into Bitcoin and Ether to maximize their value.
Fahrenheit's new restructuring plan includes mining, institutional lending, and investments in Liquid cryptocurrency for USD. Comparing Fahrenheit's recovery plan to the phase-out plan of the Blockchain Recovery Investment Coalition (BRIC), which is a holding company of Winklevoss-own ed Gemini Trust, Bank of the Future estimates a recovery rate of around 65% for both options, potentially rising to 75% if 10% of claims go unclaimed.
Fahrenheit's recovery plan includes a combination of equity and liquid cryptocurrencies, with approximately 41.4% of recoveries being in equity and the remaining 58.6% in liquid cryptocurrency. In contrast, an orderly exit under the BRIC plan saw only 12. 4% of recovery in equity, with the remaining 87.6% in liquid cryptocurrencies.
Dixon advises creditors to attempt to exit the bankruptcy proceedings before the end of 2023 or before BTC and ETH prices reach the estimated levels. He acknowledges that achieving these outcomes might require hard work and careful management to avoid potential market fluctuations .
