Celsius Plans to Issue a New Crypto to Repay its Creditors
- Celsius attorney Ross M. Kwasteniet stated that the firm is in talks with its creditors about relaunching the crypto lending services.
- The new and relaunched version of the platform would be “a publicly-traded company that is properly licensed.”
- Creditors will be getting a debt token “representing all the value,” which they can sell if they believe that it will not be able to recover.
The collapse of crypto lending platform Celsius Network in early 2022 struck fear in the hearts of investors and the customers of the platform as well, who are waiting for a potential date when they will be able to withdraw funds from their accounts. Interestingly, the company has now planned to issue a new bankruptcy cryptocurrency with the aim of repaying its creditors, as per a report that cites video footage of a court hearing as a source.
According to the report from Bloomberg, Celsius attorney Ross M. Kwasteniet revealed that his client is in talks with its creditors about a possible date for relaunching the crypto lending services, along with methods for paying them back. Interestingly, at the peak of its popularity, the crypto lender had $25 billion in assets under management, and now, it owes its users close to $4.7 billion, according to a bankruptcy filing.
It is also important to note that the new and relaunched version of the platform would be “a publicly traded company that is properly licensed,” and Celsius stated that this would supposedly provide more money to creditors than simply liquidating the company. Moreover, if the solution is approved by the creditors and the court, the reorganized company would “issue a new token to creditors as part of a payout plan.”
As per the facts pointed out by Twitter account CelsiusFacts, the crypto lending platform “is looking at having a stratified recovery; smaller holders below $5K might get all assets to leave,” while the larger creditors will be getting a debt token “representing all the value,” which they can sell if they don’t believe that the crypto lender will be able to recover.
The Celsius executives are not in favor of selling their assets to their competitors at huge discounts like Voyager Digital, another crypto lending platform that is currently being acquired by Binance, the world’s largest crypto exchange. The acquisition was given the initial green signal by the bankruptcy court as per an earlier report from Bitnation.
According to CelsiusFacts, the company is looking at an extension again because the executives believe that they only have one shot at this and if things don’t go smoothly, things might change for the worse for Celsius. The Twitter account also revealed that the company is “going to be publicly traded, will use third party services to be fully compliant with US regulation while they rebuild the company to be fully compliant.”
Celsius currently does not have a solution for its loans but is “very aware of every issue with taxation and loan liquidations.” Moreover, the users of Celsius Custody will be able to withdraw $7.5K and up to 94% of their claims if the total is less than $7.5K.