Celsius To Issue A “Bankruptcy Coin” To Pay Creditors

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According to a Jan. 24 Bloomberg article that cites a video court session as its source of information, bankrupt crypto lending startup Celsius may create its own coin to compensate creditors.

The company is working with its creditors on how to restart the platform and effectively pay them back, Celsius attorney Ross M. Kwasteniet reportedly told the court. A “publicly-traded firm that is fully licensed” would be the new, relaunched version, which would apparently give creditors more money than only liquidating the business. The reformed business would “issue a new token to creditors as part of a compensation plan” if creditors and the court authorized it.

According to the report, the court will get the plan’s specifics later this week.

CelsiusFacts, a regular updater on the subject on Twitter, also stated to have discovered specifics of the restructuring plan. Celsius Network plans to go public and employ “third-party services” to make sure it conforms with U.S. financial standards, according to a statement on January 24. 

Users may withdraw up to $7,500 in claims, or 95% of the total, whichever is less. The remaining 5% or sums exceeding $7,500 would be covered by the new token, which would be issued.

The “omnibus hearing” was planned on January 24, and the agenda was made public by the court before it took place, according to the case’s court schedule. 

In June, Celsius stopped user withdrawals, blaming “extreme market circumstances” for the lack of liquidity. It submitted a bankruptcy filing in July. The creator of Celsius, Alex Mashinsky, was sued on January 5 by the New York Attorney General for allegedly making “false and misleading claims” to investors.

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