Ripple Eyes Celsius: Preparing for Its First Major Deal?

Ripple Labs is potentially exploring the possibility of acquiring bankrupt crypto lending firm Celsius Network LLC, says a recent Reuters report. If the San Francisco-based blockchain payment company succeeds in purchasing Celsius, this could mark the first significant deal for Ripple.

As stated by the unnamed spokesperson of Ripple Labs, the company is “interested in learning about Celsius and its assets” and is exploring whether they could be relevant to Ripple Labs’ business. 

The spokesperson though has declined to confirm if Ripple Labs is interested in acquiring Celsius Network. Neither company has issued any official reports or comments yet.

Ripple Submitted Court Fillings for Celsius Bankruptcy Case

Earlier this week, the bankruptcy court approved the fillings from Ripple Labs’ legal team asking for representation in Celsius Network bankruptcy case. The blockchain payment company has never been officially mentioned among the major creditors of the Celsius lending company.

A former crypto lending giant, Celsius Network collapsed in the first days of June after becoming officially insolvent and unable to repay its creditors around $4.7 billion, according to the bankruptcy fillings. 

Celsius is accused of being a Ponzi scheme, which used customers’ funds to manipulate the price of its CEL token but failed to hedge risks, which consequently led to hundreds of millions of dollars lost. According to the court filing, around $1.9 billion is currently missing on the Celsius Network’s balance sheet.

Reportedly, the former crypto lending giant has more than 100,000 creditors on the list, including Canada’s second-biggest pension and insurance fund The Caisse de Dépôt, and the trading company Alameda Research, which is closely related to the FTX co-founder Sam Bankman-Fried.  

Since the middle of June, Celsius users have been unable to access their funds. The company was later said to be considering the potential of restructuring its debts. 

Ripple’s CEO Open to Company’s Growth Plans

The Ripple Labs team did not comment on the company’s plans to potentially acquire the bankrupt crypto lending giant. However, its CEO, Brad Garlinghouse, noted earlier in June, that the blockchain payment firm is working through its growth stage and will continue looking at various segments of the crypto industry for potential mergers and acquisitions.

If Ripple succeeds in acquiring Celsius Network, the move could mark the company’s first major deal since it was founded in 2012. The not publicly traded Ripple secured a partnership with one of the biggest names in the remittance sector, MoneyGram, in 2019. It also has partnerships with numerous financial entities, including Bank of Amerika, Standard Chartered Bank (SCB), and SBI Holdings. 

Since early 2021, Ripple Labs has been in a notorious legal battle with the United States Securities and Exchange Commission (SEC), which has accused the company of selling its XRP tokens as unregistered securities and thus violating the federal Securities Act.

On the Flipside

  • Celsius Network has frozen assets in the forms of loans, mined Bitcoins, cash, and digital currencies in various custody accounts, which could be used to repay its debts. The US Department of Justice (DOJ) opposes the possibility of selling frozen assets because of a lack of information on the exact amount of the company’s holdings.

Why You Should Care

Despite the lawsuit with the SEC, Ripple Labs remains one of the key players in the blockchain-based cross-border payments sector. If the company wins the legal battle with the SEC, it should set a precedent for how other digital currencies should be treated. Legal clarity might also act as a catalyzing factor for the price jump of the company’s native coin XRP. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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Author

Simona is an editor and author at DailyCoin focusing on the areas where decentralized money meets big centralized capital. She joined DailyCoin in early 2020 after spending years working with advertising and PR for banks and venture capital firms. She stepped into crypto in early 2018, got burned, but discovered a passion for trading. Simona personally holds Bitcoin (BTC).