Bankrupt crypto lending firm Celsius could issue its own token to pay back creditors, according to a Jan. 24 report from Bloomberg that cites a video court hearing as the source of its information.
According to the report, Celsius attorney Ross M. Kwasteniet told the court that the company is negotiating with its creditors on how to relaunch the platform and how to adequately repay the platform. The new, relaunched version would be “a publicly traded company that is properly licensed”, which would supposedly bring in more money for creditors than simply liquidating the company. If approved by creditors and the court, the reorganized company would “issue a new token to creditors as part of a payout plan.”
The report said details of the plan will be submitted to the court later this week.
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Twitter user CelsiusFacts, who regularly tweets updates on the matter, also claimed to have found details of the reorganization plan. According to a Jan. 24 statement, Celsius Network plans to go public and use “third-party services” to ensure it complies with U.S. financial regulations. Users may be able to withdraw up to $7,500 in claims or 95% of the total, whichever is less. The new token would be issued to cover the remaining 5% or amounts above $7,500.
– #CelsiusNetwork is looking for a stratified recovery, smaller holders with a 5k bellow could let all assets leave.
– Bigger holders get a debt token that seems to represent all of the value, so you can sell if you don’t believe in the business or recovery.
— CelsiusFactsNumbers (@CelsiusFacts) January 24, 2023
The court’s agenda for the case shows that an “omnibus hearing” was scheduled for January 24 and that the agenda was released by the court before it took place. This hearing may have been the source of both Bloomberg and CelsiusFacts’ reports, although TSTIME was unable to confirm this at the time of publication.
Celsius blocked user withdrawals in June, citing a lack of liquidity caused by “extreme market conditions”. It filed for bankruptcy in July. On January 5, the New York Attorney General filed a lawsuit against Celsius founder Alex Mashinsky for allegedly making “false and misleading statements” to investors.