Celsius has been dealing with its bankruptcy plan since freezing customer withdrawals earlier this year in June. Now, in an apparent leaked audio of an all-in-one meeting, the company really seems to be clinging to non-fungible straws. Management has offered to issue IOU crypto tokens to customers who have not been repaired. Tiffany Fong provided the leaked audio, but CNBC was unable to independently verify the audio. However, former employees confirmed that the communications were real. Really stupid.
Tiffany Fong, who claims to be one of 500,000 Celsius customers with money trapped on the platform, says she received the audio recording from an anonymous employee who identified himself. The company has been trying to find solutions for the $8 billion in loans and $12 billion in assets that have been in limbo since Celsius filed for bankruptcy earlier this year.
The recording features Celsius co-founder Nuke Goldstein suggesting the release of new “wrapped tokens” that will serve as crypto IOUs for customers. The hope is that customers will hold on to the tokens long enough for Celsius to emerge from bankruptcy. Now, that seems like a tall order for customers who haven’t had access to their holdings for months to long go for a new cryptocurrency issued by an insolvent company, but that’s the kind of wishful thinking that has put Celsius in the current situation where they find the business in. Currently, Goldstein believes the tokens would be valued at less than what customers originally invested.
This terrible IOU token redemption scheme is not the only idea Celsius leadership is coming up with, but it is definitely the dumbest. CTO Guillermo Bodnar also said the company is working on a transaction management system designed to track the company’s blockchain assets. That’s right, the company that managed billions of dollars in digital assets never really had the right tracking software. It is truly shocking that this outfit was unable to detect the absurdly poor risk management, but again the Celsius “Earn” accounts were showing promised annual returns as high as 17%.
It’s this kind of magical risk-taking that really makes most people feel like the broader cryptocurrency market is a Russian doll of Ponzi schemes and scams. With management tossing around such dumb ideas as Celsius tries to get out of bankruptcy, it’s hard to believe any customers feel more confident after hearing these ridiculous solutions.