Celsius Revival Hinges on “Crypto-Based Solutions and Tradable Wrapped Assets” – crypto.news
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Celsius Network founder Nuke Goldstein discusses the plan to use “crypto-based solutions” to pay back their Earn customers and revive the company’s fortunes.
The cryptolender creates CEL-wrapped tokens that can be traded on Uniswap
In the recording, which was sent anonymously to crypto YouTuber Tiffany Fong, Goldstein outlines Celsius Network’s proposed recovery plan in more detail. The plan was hinted at in another leaked recording of the Celsius All Hands Meeting, in which company CEO Alex Mashinsky and Chief Compliance Officer Oren Blonstein spoke about “unprecedented and truly innovative solutions” to meet the creditor’s requirements.
According to Goldstein, Celsius first plans to simplify its coin holdings by consolidating its remaining holdings of more than 50 different cryptocurrencies into Bitcoin (BTC), Ether (ETH) and USD Coin (USDC). After the consolidation, Celsius will create “wrapped claim id” known as Celsius X (Cx). The wrapped token represents the ratio between the amount Celsius owes its creditors and the amount the company actually holds.
Celsius clients can then redeem the bundled tokens at a certain ratio. Conversely, they can hold their Cx tokens on the Celsius platform and look forward to higher profits as revenues begin to flow from the company’s bitcoin mining operations and other potentially lucrative opportunities in the broader crypto market.
In addition, Goldstein argued that Celsius customers could also trade wrapped tokens on decentralized exchanges like Uniswap, where market forces would determine their value.
The plan may allow customers to speculate on Celsius’ future
Tiffany Fong reported receiving Goldstein’s recording prior to the September 8 All Hands Meeting. In his estimation, the price of the proposed Cx tokens is unlikely to be tied 1:1 to the value of the original cryptocurrency in the same way that assets are. such as Wrapped BTC (wBTC) is pegged to Bitcoin at a 1:1 ratio. He explained that this would be primarily due to Celsius’ balance sheet deficit, which according to the crypto lender’s latest Coin Report is $2.5 billion.
While there is a risk that Cx prices will fall in the event of a crowdsale, the recovery plan allows customers to speculate on the crypto company’s long-term future.
Did Celsius copy the Bitfinex manual?
Many Celsius customers have compared the proposed recovery plan to what Bitfinex did after losing 12,000 BTC in a 2016 hack. In Bitfinex’s recovery solution, the crypto exchange chose BFX tokens, which represent the value of the lost BTC. The idea was to buy back BFX tokens from Bitfinex customers at $1.00 per token. In contrast, clients could receive a certain percentage of Bitfinex shares, allowing them to speculate on a possible stock market recovery.
It is said that in half a year, thanks to the recovery plan, Bitfinex customers recovered 75-100% of their funds. However, Bitfinex’s repayment was greatly aided by the recovery of approximately $3.6 billion in BTC from the hackers responsible for the attack.
Celsius doesn’t have that luxury to fall back on. Instead, it relies on BTC mining revenue and transaction fees from the proposed rebranding as a crypto-custodian to cover the shortfall on its books.
Celsius’ Committee of Unsecured Creditors (UCC) has acknowledged meeting with CEO Alex Mashinsky, who presented the proposal to them. However, the committee has not yet publicly issued its opinion on the proposal, instead urging the crypto lender to submit the entire plan to the bankruptcy court.