Celsius Chapter 11 Update and Galaxy's Acquisition of GK8

Galaxy Digital announced its acquisition of custodian GK8 for $44.0mm in cash consideration. GK8's custody solution includes both cold storage and multi-party computation (MPC). Celsius originally purchased GK8 in November 2021 for ~$115mm. The new $44.0mm consideration reflects a (61.7%) discount on the transaction a little more than a year ago. Post transaction, Galaxy will support GK8's ongoing operations in addition to building out its GalaxyOne offering. GalaxyOne will be an all-in-one institutional product offering trading, lending, cross-portfolio margining and derivatives. 

Celsius filed and was approved for its updated key employee retention plan (KERP) in late November after having their prior KERP denied in early November. Consideration falls out to ~2.89mm in aggregate, assuming all KERP Participants are successfully retained. As of the November 22, 2022 filing, Celsius employs 167 people. The KERP would include 59 or ~35% of the total workforce. In addition to the general reasons for wanting a KERP[1][2], Celsius cited that certain employees have not been paid their agreed-upon compensation during the Ch. 11 proceedings. This is because Celsius agreed to pay certain employees a portion or all their compensation with the proprietary CEL token. 39 of the KERP Participants received, on average, ~15,000 CEL tokens. As of December 31, 2022, the average award equated to ~$66,000. As of the Petition Date, the average award of 15,000 tokens was worth approximately $13,800. On average, Participants are owed an additional 25,500 CEL tokens that have not been issued by the Debtors, some of which would have been awarded if not for the Pause and the chapter 11 filings. Because of the paused payments and volatile nature of CEL token pricing, Celsius believes a KERP is in order to keep these employees incentivized to stay at the firm.