Bankrupt Celsius Network to Revive Firm with a Focus on Custody

Key Takeaways

  • Celsius executives want to rebuild the company with a focus on custody.
  • Celsius is working with the Committee of Unsecured Creditors, or U.C.C. — to devise a plan to restart operations, whereas its debts stand at $2.85 billion.

Bankrupt crypto lender Celsius has now come up with a plan to revive the firm from the depths of insolvency. Reportedly Celisu C.E.O. Alex Mashinsky spoke with the employees on September 8, in which he detailed a revival plan.

Alex and Celisu Executive-Oren Blonstein stated they hoped to rebuild the company with a focus on custody — storing people’s cryptocurrencies for them and then charging fees on certain types of transactions. They added that the revival plan was code-named Kelvin after the temperature unit.

According to a recording of the meeting accessed by the Times, Alex also compared the rebuilding process to corporate turnarounds at some of the world’s most famous brands, including Pepsi, which went bankrupt in 1923 and 1931.

“Does it make the Pepsi taste less good?” Mr. Mashinsky asked employees. “Delta filed for bankruptcy. Do you not fly Delta because they filed for bankruptcy?”.

In a statement, a Celsius spokeswoman said the company regularly also held internal meetings to “prepare for all scenarios.”

As per media reports, at the employee meeting, the C.E.O. said Celsius was working with a legal entity representing the company’s creditors — a group known as the Committee of Unsecured Creditors, or U.C.C. — to devise a plan to restart operations.

Reportedly, following the meeting with Celsius representatives, the committee raised concerns about Alex’s continuing involvement in the company and major questions about the feasibility of the Kelvin proposal.

Celsius’s demise to bankruptcy was slow but certain. Celsius’s marketing promise, which involved luring customers by offering interest rates as high as 18% was deemed unsustainable right from the start.

Celsius spiraled into bankruptcy after the crash of TeraLUNA, and the fall of Three Arrow Capital, a crypto Hedge Fund, and later halted customer withdrawals in July, citing “extreme market conditions.”

The company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York on July 13. Filings from a new bankruptcy report reveal that Celsius Network’s actual debt stands at $2.85 billion, as against their bankruptcy filing claims of a $1.2 billion deficit.

Saniya Raahath
Saniya Raahath

Newsletter

Crypto News, NFTs and Market Updates

Can’t find what you’re looking for? Type below and hit enter!