Celsius keeps a Hail Mary bankruptcy plan: turn your debt into a new digital currency

Client funds have been in limbo since bankrupt crypto lender Celsius froze withdrawals in June. The leaked audio shared with news reveals tentative plans to compensate them.

The company wants to issue cryptocurrency “IOU” to customers who have signed up for some of its accounts. The entry was provided by Tiffany Fong. Who said she was one of the 500,000 Celsius subscribers with funds locked on the platform. Fong said he receive audio from an unnamed employee during his communication.

CNBC could not verify that the leaked audio was of the entire exchange from an internal meeting on September 1. However, CNBC spoke to a former employee who confirm the footage was authentic. In the audio, Chief Technology Officer Guillermo Bodnar says the plans are in “early stages.”

That statement may have change in the weeks since the call.

In the note, Celsius co-founder Nuke Goldstein outlines a compensation plan for customers. Who have deposited assets into Celsius’ Earn accounts. Celsius promises a return of up to 17%.

Goldstein said Celsius would issue a “wrapped token” as a promissory note for customers. The tokens represent the relationship between what Celsius owes customers and the assets available to them. He said if customers wait to redeem their tokens, there is a greater chance. That the difference between what Celsius has and what he owes will shrink.

This is a risky bet to increase the value of the tokens that emerge from a company that just went bankrupt. Goldstein said its value would likely increase as Celsius has revenue from his mining business, staking ETH and other coins that could become liquid.

According to Goldstein, Celsius also intends to allow customers to exchange these tokens. He said tokens could be redeem in Celsius for a value that may be less than the value owe or on crypto platforms such as Uniswap. Allowing the market to determine the token’s value.