Bankrupt Celsius considers issuing a new token to reimburse creditors

Key takeaways:

  • According to reports, insolvent cryptocurrency lender Celsius is considering launching a new digital token.
  • If the distribution plan was approved by the court and the creditors, the new token would be given to the restructured company’s creditors as a part of the new strategy.

Celsius is considering issuing a new cryptocurrency token as part of its preparations to restructure, which would enable the company to raise money and pay off its creditors.

According to experts, this strategy alluded to a potential launch of a new token. The cryptocurrency lender wants to recast itself as a “officially licensed publicly traded firm.

A group of creditors have reportedly put pressure on Celsius to imitate the Bitfinex exchange, which provided replacement tokens to affected users after a hack, according to a Bloomberg article.

The new, relaunched publicly listed model of the company is only conceivable if creditors receive more money than plainly liquidating the company. The reorganised company would provide a new token to creditors as an important aspect of a reimbursement plan if permitted by creditors and the court.

In its preliminary effort to sell both the company and its assets after declaring bankruptcy in July, Celsius’attorney Ross Kwasteniet stated that the bids “had not been persuasive.”

According to reports, the reorganisation plan has been discussed with Celsius’ creditor groups and will be put to a vote; however, the vote will not be taken into consideration by the court when making its judgement.

Asset Share Tokens (AST), which represent the value of the locked assets in this new compensation plan, would be given to creditors who have locked assets above a certain limit.

Holders of AST have two options: either they keep the tokens, which, in the opinion of the experts, would qualify them to dividends over time, or they sell them on the open market.

The cryptocurrency lender also stated that it is not the first to attempt to develop a new token in order to avoid financial troubles. According to Celsius, all depositors have one thing in common: they all deposited cryptocurrency, hence they are all entitled to the recovery of that cryptocurrency.

Celsius devised a strategy to save the company from bankruptcy a few months ago. According to reports, Celsius CEO Alex Mashinsky discussed a recovery strategy with the staff on September 8.

As per Alex and Celisu Executive-Oren Blonstein, they intend to restructure the business with a focus on custody, which entails keeping customers’ bitcoins safe while also earning fees for specific kinds of transactions.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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