• Celsius is attempting to exit bankruptcy by issuing a new token.
• The tokens would be distributed to creditors with claims over $5,000 against the platform.
• Celsius’s legal team argues that liquidation would raise less money for creditors than restructuring.
The cryptocurrency lending platform, Celsius, has been in bankruptcy since July, and the court proceedings have been rife with accusations of fraud, arguments about customers signing over their crypto, and alleged attempts by the former CEO to flee the country. Now, the lender’s legal team is proposing a restructuring plan that heavily relies on the issuance of a new token to “aid recovery.”
Celsius’s plan would involve the distribution of the new token to creditors with claims worth more than $5,000 against the platform. This token would be a digital asset that would allow holders to claim a portion of the platform’s revenue. The team argues that this method of restructuring would raise more money for creditors than liquidation, and would result in a successful exit from bankruptcy.
The proposal has drawn criticism from some experts, who point out that many of the creditors may not be familiar with the concept of a cryptocurrency token. They also argue that the token could be subject to manipulation by the platform, which could potentially lead to a lack of transparency and accountability. Additionally, some argue that the token could be used to funnel money away from the creditors through various backdoor channels.
Celsius’s legal team has responded to these criticisms by noting that the token would be subject to regular audits and that the platform would adhere to all applicable laws. They also argue that the token would be a far more effective way to distribute the platform’s resources to creditors than liquidation.
Ultimately, the court will decide whether or not the token issuance plan is the best way for Celsius to exit bankruptcy. If it is accepted, it could set a precedent for future cryptocurrency bankruptcies. On the other hand, if it is rejected, it could lead to a more complicated and lengthy liquidation process.