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FTX Says Bailing Out Celsius Too Risky

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Crypto exchange FTX, which has been handing out lifelines to crypto companies amid the ongoing liquidity crisis and market crash, has apparently walked away from a deal with distressed staking platform Celsius.

FTX was interested in making a deal with Celsius but walked away because of the state of its finances, two sources told The Block. The platform has a US$2 billion hole in its balance sheet, and FTX found the company too difficult to deal with, one of the sources told the publication.

Read more: Celsius Says HODL But its Lawyers Advise Declaring Bankruptcy

Celsius has appointed Citigroup to advise on its financial options and it is working with restructuring consultants from advisory firm Alvarez & Marsal.

The crypto staking platform, which has some US$12 billion in assets under management as of May 2022, according to the company, paused customer withdrawals earlier this month and subsequently stopped its weekly AMA (Ask Me Anything) sessions with chief executive Alex Mashinsky, as the crypto market took a bearish turn.

Celsius updated its blog Thursday, saying it is “focused and working as quickly as we can to stabilize liquidity and operations, in order to be positioned to share more information with the community” but provided no details, or about when withdrawals are expected to resume.

While it has cooled its interest in Celsius, FTX is seeking to buy embattled crypto lender BlockFi for US$25 million in a fire sale. It previously provided US$250 million revolving credit facility to bolster its balance sheet and platform strength.

Read more: Below 0° Celsius: When Your Deposit Gets Frozen