Judge Pauses Galaxy’s $44 Million Deal to Buy Celsius Assets

A US bankruptcy judge declined to immediately approve Galaxy Digital’s deal to buy a Celsius Network subsidiary for $44 million, demanding more details about the structure of the sale.

Judge Martin Glenn said he was “blindsided” by a provision in the sale documents that would transfer potential legal claims from Celsius to Galaxy. At a hearing Thursday, he asked Celsius lawyers to provide additional evidence about the value of the claims, which relate to hypothetical clawbacks tied to GK8, the crypto custody subsidiary being purchased.

Celsius bought GK8 a little more than one year ago for $115 million. Since then, crypto markets have crashed — the $44 million sale to Galaxy represents a more than 60% discount to the initial purchase price.

Glenn is likely to approve the sale after receiving sworn statements and additional papers further explaining the transfer of so-called avoidance actions, he said later in the hearing. The potential legal claims at issue are limited in scope and have little if any value, a lawyer for Celsius creditors told Glenn.

“I don’t see this as prolonging these issues for very long,” Glenn said.

The sale calls for GK8 founders Lior Lamesh and Shahar Shamai, along with about 40 existing employees, to continue working for the company. GK8 is a blockchain security company that allows users to store crypto without the use of the internet, a lawyer for Celsius said in the hearing.

The bankruptcy is Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York (Manhattan).

To contact the reporter on this story:
Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editors responsible for this story:
Claire Boston at cboston6@bloomberg.net

Michael B. Marois

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