Celsius has been dealing with their bankruptcy plan since freezing customer withdrawals earlier this year in June. Now, in an apparent audio leak of an internal all-hands meeting, the company really appears to be grasping at non-fungible straws. The leadership has proposed issuing IOU crypto tokens to clients who have not been made whole. Tiffany Fong provided the leaked audio, but CNBC was unable to verify the audio independently, but former employees confirmed that the communications were indeed real. Real stupid.
Tiffany Fong, who claims to be one of the 500,000 Celsius clients with money trapped on the platform, says she received the audio recording from an anonymous self-identified employee. The company has been trying to figure out 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 a crypto IOU to customers. The hope is that customers will hold onto the tokens long enough for Celsius to emerge from bankruptcy. Now this seems like a tall order for clients who have not had access to their holdings for months to go long a new cryptocurrency issued by an insolvent company, but this it the kind of magical thinking that got Celsius into the current predicament they find the company in. As of right now, Goldstein believes that the tokens would be valued at less than the clients had originally invested.
This terrible IOU token reimbursement plan isn’t the only idea Celsius’ leadership is kicking around, but it is certainly the dumbest. Chief Technology Officer Guillermo Bodnar also said that the company is working on a transaction management system designed to track the company’s blockchain assets. That’s right, the company which managed billions of dollars of digital assets never really had the proper tracking software. It is truly shocking that this outfit was unable to detect the absurdly poor risk management taking place, but then again the Celsius “Earn” accounts carried promised annual yields 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 nesting doll of Ponzi schemes and scams. With management kicking around such stupid ideas as Celsius attempts to emerge from bankruptcy, it is hard to believe that any clients feel any more confident after hearing these ridiculous solutions.