There may be a new percentage symbol on the horizon.
As part of plans to reorganize the defunct crypto lender, Celsius is considering issuing a new cryptocurrency token that would allow the company to raise funds and pay off its creditors, according to a… bloomberg a report.
At a court hearing on Tuesday, Celsius attorney Ross M. Questnet told US Bankruptcy Judge Martin Glenn that a properly licensed, publicly traded company, like a refreshing Celsius, could raise more money for creditors than sell its limited assets at today’s prices.
According to Costnet, Celsius’ individual asset bids “were not convincing.”
The restructuring plan has reportedly been put up for discussion with creditor groups in Celsius and will be voted on, although the vote will not be binding on the court once a decision is made.
Nor is the lender’s plans the first to introduce a new code to avoid financial troubles.
Previous examples of crypto companies issuing tokens are 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 issue by issuing IOU (I Owe You) debt tokens.
If Celsius’s reorganization plan is approved by the court, the assets of the new company would include a portfolio of loans and other investments, as well as Bitcoin miners operated by Celsius, according to Kwasteniet.
Celsius’ lawyer added that court documents detailing the proposed plan will be released later this week.
Decrypt Contact Celsius and Ross M. Kwasteniet for further comments.
Celsius financial problems
The distressed cryptocurrency lender, which allowed users to earn returns on their digital assets, filed for bankruptcy protection last July, revealing a $1.2 billion hole on its balance sheet.
In addition to facing claims from creditors and accusations of running a Ponzi scheme, Celsius also found itself embroiled in a dispute with Bitcoin mining company Core Scientific — which filed for bankruptcy in December — after it stopped covering its share of utility bills.
Earlier in January, the two bankrupt companies reached an agreement to shut down 37,000 mining rigs that Core claimed cost the company up to $53,000 per day.
Former Celsius CEO Alex Mashinksy was also sued this month by New York Attorney General Letitia James, who alleged Mashinksy “promised to lead investors to financial freedom but led them down a path to financial ruin.”
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