Home Business Celsius Network is planning a comeback after the cryptocurrency crash

Celsius Network is planning a comeback after the cryptocurrency crash

by SuperiorInvest

The collapse of an experimental cryptocurrency bank Celsius network was one of the prime movers this spring’s cryptocurrency crashwhich wiped out nearly $1 trillion from the market and ruined thousands of investors.

Celsius filed for bankruptcy in July. Now he’s about to make a comeback.

At a Sept. 8 employee meeting, Alex Mashinsky, CEO of Celsius, outlined a bold plan to revive the company, according to a recording of the event shared with The New York Times. He and Oren Blonstein, Celsi’s other chief executive, said they hope to rebuild the company with a focus on escrow — storing people’s cryptocurrencies for them and then charging a fee for certain types of transactions. They said the project was codenamed Kelvin, after the unit of temperature.

Mr. Mashinsky, 56, faced skeptical questions from employees. He compared the rebuilding process to corporate turnarounds at some of the world’s most famous brands, including Pepsi, which went bankrupt in 1923 and 1931.

“Does that make Pepsi taste less good?” Mr. Mashinsky asked the staff. “Delta filed for bankruptcy. Not flying Delta because they filed for bankruptcy?

The record of the meeting was sent to the address Tiffany FongCelsius customer who created YouTube videos about the crash in the spring. She shared the recording with The Times, which independently confirmed its authenticity.

In a statement, a Celsius spokeswoman said the company regularly holds internal meetings “prepare for all scenarios.”

“Our employees are central to our efforts,” the statement said. “We will continue to rely on them to help prepare any requirements that will be necessary to implement the final recovery plan as quickly as possible.”

Celsius’ recovery efforts come at a time of transition for the crypto industry, as startups whose reckless practices triggered the decline seek to regroup. In recent months, other instigators of the crash — including Do Kwon, The trash-talking founder from the failed cryptocurrency Luna — they have too persecuted fresh crypto businesses.

Celsius rose to prominence with a marketing promise that ultimately proved unsustainable: Store your digital assets and earn up to 18 percent interest. The company also allows customers to take out loans using their deposits as collateral and participate in a “stake,” an investment maneuver that allows users to earn rewards for holding cryptocurrencies. In 2021, Celsius controlled assets worth $20 billion and had one million customers.

But Celsius generated its high returns with risky investments that quickly went awry when the crypto market crashed. Tens of thousands of customers still have digital assets trapped on the platform. In court this summer, Celsius announced it owed customers $4.7 billion.

Celsi’s fate is not really in Mr. Mashinski’s hands. Any proposal would require the approval of New York federal bankruptcy judge Martin Glenn, who is overseeing the process. The outcome could take a number of forms, such as a buyer purchasing part of the company.

At the staff meeting, Mr. Mashinsky said Celsius was working with the legal entity representing the company’s creditors — a group known as the Unsecured Creditors Committee, or UCC — to develop a plan to resume operations.

“Most of our community, including UCC, have asked us to continue the services,” he said. “They think these services are valuable and they want to continue to use loans and bets and escrow and things like that.”

But after meeting with Celsius representatives, the committee had concerns about Mr. Mashinski’s continued involvement in the company and fundamental questions about the feasibility of Kelvin’s proposal, according to a person with knowledge of the matter.

Lawyers for the committee declined to comment.

The exact details of Celsius’ plan for a reboot remain unclear. The company operates bitcoin mining, which could become part of the reorganized business. But at the meeting, Mr. Mashinsky and Mr. Blonstein focused on the possibility of storing cryptoassets for Celsius users. Mr. Mashinsky said he could envision charging customers a fee to access a special, highly secure cryptocurrency wallet.

In the past, he had Celsius to market alone as a zero-fee service as part of its idea that customers should “unbank” from traditional finance. Executives are now considering a new approach.

“If the core of our business is custodial and our customers decide to do things like share somewhere or exchange one asset for another or take out a loan against an asset as collateral, we should be able to charge a commission,” Mr. Blonstein told employees.

Since Celsius filed for bankruptcy, customers have encrypted to get their crypto assets back, raising money to hire lawyers and strategies in Telegram group chats. At the meeting, Mr. Blonstein said the company was planning a “unique crypto solution” to compensate customers, but declined to elaborate.

Mr Blonstein also said Celsius was at a key point on the “hero’s journey” towards redemption.

“This hero has a mission – something they want to achieve. They experience initial success, stumble, fall behind in some way and have this dark moment,” he said. “If we are successful, it will be a success story like no other.”

Even Apple, Mr. Mashinsky said, once considered bankrupt as an option.

“We’re going to be in the dustbin for a while of companies that were great or almost great or great, but will they go away?” he said. “The community is behind us.

Kitty Bennett contributed research.

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