New ‘Celsius token’ may be used to repay creditors: report

Regulation

Bankrupt crypto lending firm Celsius may issue its own token to repay creditors, according to a January 24 report from Bloomberg. The report cites a video court hearing as the source of the information.

According to the report, Celsius attorney Ross M. Kwasteniet told the court that the firm is negotiating with its creditors on how to relaunch the platform and adequately pay them back. The new, relaunched version would be “a publicly-traded company that is properly licensed,” which could allegedly provide 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 stated that details of the plan will be filed with the court later this week.

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Twitter user CelsiusFacts, who often tweets updates about the case, also claimed to have found details of the reorganization plan. According to a statement on January 24, Celsius Network intends to become publicly traded and use “third party services” to ensure that it complies with U.S. financial regulations. Users may be able to withdraw up to $7,500 worth of claims or 95% of the total, whichever amount is smaller. The new token would be issued to cover the remaining 5% or amounts above $7,500.

The court schedule for the case shows that an “Omnibus Hearing” was scheduled for January 24, and the agenda was released by the court before it occurred. This hearing may have been the source of the reports from both Bloomberg and @CelsiusFacts, although Cointelegraph has not been able to confirm this at time of publication.

Celsius blocked user withdrawals in June 2022, citing a lack of liquidity caused by “extreme market conditions.” In July, it filed for bankruptcy. On Jan. 5, the New York Attorney General filed suit against Celsius founder Alex Mashinsky for allegedly giving “false and misleading statements” to investors.

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