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One of the more fascinating aspects of human behavior we’ve had the privilege of experiencing directly due to our platform is people taking their foot off the gas at exactly the wrong times despite our numerous, loud, and credible warnings.
Perhaps there is something in the collective consciousness of humanity that only allows the independent thinkers to thrive.
We won’t don Greek statues as profile pictures and launch into a polemic about how our ancestors had to “follow the herd to survive.”
You don’t need to ask hunter gatherers to realize that people still follow the herd, despite their survival being reasonably assured.
In times of panic, people panic (shocker!)
In times of boredom, people stop paying attention.
And in times of euphoria, people overvalue their prospects.
If this does not instinctively make sense to you by now given the last 3 years (zoomers exempted), you might as well stop reading here.
It’s not just the “average investor” who falls into the trappings of herd mentality. Even “professional investors” who raise billions of dollars from outside investors can blow up in spectacular fashion.
Even “professional investors” can get duped by the likes of FTX. Even professional investors with huge swaths of money (9+ figures under management) did not have the courage to step in when there was a bloodbath.
Crypto remains an unsophisticated market, which means there are still plenty of opportunities to get ahead.
In fact, crypto remains easy pickings. But it’s not “technical analysis” that’s going to help you get ahead.
It’s being able to quickly make the connection between an event and how humans will behave in reaction.
Today’s post will have a market update.
Before we get there, we’re going to walk through some major developments in the world of crypto bankruptcies. New experiments are in the works.
Big Updates in Crypto Bankruptcy Land
A crypto consortium going by the name of “Fahrenheit” has proposed a new plan to handle the assets of bankrupt lender Celsius.
Fahrenheit will fund funding the plan and the funds will be used to repay Celsius Network’s debts, and form a “NewCo”. The funding will be primarily used for operations and investing in loans and structured settlements, with the team behind Fahrenheit taking an active role in managing the new entity.
Part of the plan also involves.. Taking the new Celsius public!
Fahrenheit is targeting listing on either the NASDAQ or the Abu Dhabi Securities Exchange. If that’s not possible, they’re going to put it on the OTC market or launch a token (subject to regulatory voodoo).
The consortium includes:
Arrington Capital (VC)
US Bitcoin Corp (Bitcoin miner)
Proof Group (VC)
Steven Kokinos (former CEO of Algorand, CEO of NewCo)
Ravi Kaza (runs a hedge fund)
It got a bit spicy on the timeline.
L-O-L. This was a pretty savage tweet from Michael Arrington. In case Krissy Mashinsky is reading this (she followed Owl) - hey.
Anyways here are the details of the proposed plan.
When the plan goes into effect, certain assets will be transferred to NewCo.
These assets include:
DeFi Cryptocurrency Assets: crypto at Stakehound or in other DeFi protocols.
Institutional Loan portfolio: OTC loans from Celsius to institutions
PE & VC Investments: Celsius alternative investments
Mining: Debtor Celsius Mining LLC, its non-Debtor subsidiary Celsius Mining IL Ltd., and their assets
$500 million in Liquid Cryptocurrency: Crypto to be distributed pursuant to the plan, including (a) BTC; (b) Pure ETH; (c) stETH; and (d) Stablecoins.
*If you’re confused by what they mean by “Pure ETH”, it’s just ETH.
Fahrenheit along with the new management team will manage NewCo. In exchange they’ll receive:
$35 million per year ($15 million of which will go to mining operations)
5% of NewCo equity vesting over 5 years
Debtors and UCC can grant stock options in five tranches over five years
Fahrenheit will contribute $50 million in equity to NewCo by purchasing shares with a two-year lockup that restricts sales to 60% of equity subject to trading price.
The mining assets will be managed by US Bitcoin. They’ll:
Build a 100 MW bitcoin mining facility and support existing facilities.
Procure equipment and materials
Facilitate partnerships
Assist in maximizing the value of existing credits.
They’ll also provide access to energy trading desks and indemnify NewCo in a specific lawsuit.
NewCo will be managed by an exec team and a BoD comprised of seven people. Fahrenheit has to submit a $10 million cash deposit within three days, and the deal will still have to be approved by the Bankruptcy Court Judge.
The plan involves staking services offered by Proof Group. They’ll give NewCo a royalty-free license to use Proof Group's staking services IP. Proof will also support staking in NewCo at no cost.
The parties involved in the reorganization, namely Fahrenheit, Proof Group, and Arrington Capital, are to share all deal flow and investment opportunities with NewCo.
Oh right.. there is probably a question still on your minds (an important one).
What in the world is going to happen to depositors and other customers?
Note: these are complex legal docs and there are numerous claimants with varying treatments. If you’re a paid sub you can also hit us in the comments if you’re curious or affected by the treatment of a specific claim and we can explain it simply.