Celsius Resuscitation: Under the new plan, codenamed Kelvin, the lender will pivot to storing customers’ crypto in a special wallet and charge different fees for different transactions.
Facing employee doubts, Mashinsky rhetorically asked employees whether the two companies, PepsiCo and Delta, that filed for bankruptcy prevented people from buying Pepsi or flying on Delta Airlines. “Does this make Pepsi taste less good?” Mashinsky chuckled. “Didn’t you fly Delta because they filed for bankruptcy?” He added.
Celsius filed for bankruptcy protection in July 2022. This was almost a month after all withdrawals were halted as the downturn in the crypto market took its toll on the company’s business model, which offered an eye-popping yield of 19% on crypto investments. While championing itself for helping Average Joe escape the clutches of Wall Street banks, investor documents revealed that the crypto lender took on far more risk than the bank itself. It created large loans with little collateral, which made it difficult to honor massive customer withdrawals. It now owes customers $4.7 billion.
New plan will work, says Blonstein
Any decision to reconstitute Celsius as a custodian rather than a lender would need to be approved by the New York bankruptcy judge overseeing the case. The company has so far been allowed to use its crypto mining facilities to generate revenue to help meet customers’ withdrawal demands.
It has appointed a committee of unsecured creditors through a legal representative to resume business. The committee is keen for Celsius to continue its operations, but expressed doubts that the company can move forward with Mashinsky. The committee is also skeptical of the Kelvin scheme.
But Blonstein is adamant that the Calvin plan might work. “If the foundation of our business is custody, and our clients are electing to do things such as swapping out a stake or one asset for another, or taking out a loan against an asset as collateral, we have a There should be capacity to charge commission,” he said in the meeting.
This plan will be at variance from the core ethos of the company of zero fee.
Blonstein also said that the company had unusual plans for paying customers without disclosing details. “If we succeed, it will be a success story never seen before,” he concluded.
Celsius plan gets ridicule from crypto Twitter
The new plan has drawn criticism on Crypto Twitter with journalist Jacob Silverman of currencies The rhetorical question, “Why would anyone rely on the resurrected Celsius as a mentor? Mashinsky’s biggest concern is probably staying out of prison I think. Silverman co-authored a book on crypto and fraud with former OC actor Ben McKenzie. – is writing.
Another Twitter user, @ross_stalker, questioned Incentives to deposit money in Celsius versus depositing money in a regular bank. Why would he pay a fee to hold crypto in a new type of secure crypto wallet described by Celsius officials when he could keep the money in the bank at no charge?
Celsius is awaiting the outcome of the bankruptcy hearing, scheduled for October 6, 2022, where a decision will be made whether customers will be allowed to withdraw their crypto from the company’s “custodial program” and “holding of accounts”.
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