There may be a new Celsius token on the horizon.
As part of the defunct crypto lender's reorganization plans, Celsius is mulling the issuance of a new crypto token that would let the firm raise funds and repay its creditors, per a Bloomberg report.
In a court hearing on Tuesday, Celsius’ attorney Ross M. Kwasteniet told U.S. bankruptcy judge Martin Glenn that a properly licensed and publicly-traded company, such as a revived Celsius, would be able to raise more money for creditors as opposed to simply selling its limited assets at today’s prices.
According to Kwasteniet, offers for Celsius’ individual assets “have not been compelling.”
The reorganization plan has reportedly been brought up for a discussion with Celsius’ creditor groups and will be voted on, although the vote would not be binding for the court when making the decision.
The lender's plans aren't the first to introduce a new token to evade financial troubles, either.
Previous examples of crypto companies issuing tokens included Bitcoin exchange Bitfinex, which launched the LEO Token in 2019 to cover losses from its dealings with Panama-based Crypto Capital. Elsewhere, Poolin, a Beijing-based Bitcoin mining pool, halted withdrawals last September and addressed the matter by issuing IOU (I Owe You) debt tokens.
Should the court greenlight Celsius' reorganization plan, the new company’s assets would include a portfolio of loans and other investments, as well Bitcoin mining machines operated by Celsius, according to Kwasteniet.
The Celsius’ attorney added that court filings detailing the proposed plan will be published later this week.
Decrypt has reached out to Celsius and Ross M. Kwasteniet for additional comments.
Celsius' financial woes
The embattled crypto lender, which allowed users to earn returns on their digital assets, filed for bankruptcy protection in July last year, revealing a $1.2 billion hole in its balance sheet.
Apart from facing creditors’ claims and accusations of running a Ponzi scheme, Celsius also found itself dragged into a dispute with Bitcoin mining company Core Scientific—which itself went bust in December—after it stopped covering its share of the electricity bills.
Earlier in January, the two bankrupt companies reached an agreement to shut off 37,000 Celsius mining rigs that Core claimed cost the firm as much as $53,000 a day.
Former Celsius CEO Alex Mashinksy was also sued this month by New York Attorney General Letitia James, who alleges that Mashinsky “promised to lead investors to financial freedom but led them down a path of financial ruin.”