Media reports on Celsius plans to issue debt tokens
Tokens will be credited to large creditors, small depositors will receive partial compensation in cryptocurrency
25.01.2023 - 07:20
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2 min
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What’s new? Bankrupt crypto lending platform Celsius Network is considering unequal refunds to different categories of users. So, according to Bloomberg, creditors up to a certain threshold will be able to receive part of their funds in liquid cryptocurrencies, while larger holders will receive a debt token in the amount of the debt amount. The proposed initiative has yet to receive approval from the US regulators, the company’s creditors, and bankruptcy judge Martin Glenn.
What else is known? Journalists stress that Celsius has no plans to sell the company at a discount and is considering various options to satisfy creditors’ claims. Lawyers for the platform said that Celsius intends to create a new publicly traded “recovery corporation” to emerge from the bankruptcy process. According to the attorneys, this could happen in as little as a few months.
Under the submitted plan, large creditors would receive a token called the Asset Share Token (AST), which would reflect the value of their assets. AST owners would be able to keep the tokens and receive dividends in the future or sell the assets on the open market.
According to Celsius’ lawyers, Earn program customers will also be able to count on the return of deposited assets, even though Judge Glenn found them to be Celsius’ property.
Celsius situation. On January 5, New York State Attorney General Letitia James filed a lawsuit against Alex Mashinsky, co-founder and former CEO of Celsius and related companies, for defrauding “hundreds of thousands of investors” of billions of dollars.
In December, bankruptcy judge Martin Glenn ordered Celsius to return $44 million to custodial account holders. Meanwhile, earlier in July, Celsius claimed ownership of most of the customer funds under the platform’s terms of use.
For what led the company to collapse, read GetBlock Magazine’s exclusive feature.
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