The cryptocurrency lending platform, Celsius, currently in the throes of bankruptcy, reportedly plans to rebuild itself around digital asset custody services.
According to a Tuesday report from the New York Times, Celsius CEO Alex Mashinsky and Chief Innovation Officer and Chief Compliance Officer Oren Blonstein intended to revive the company through a project called “Kelvin,” storing users’ cryptocurrencies and charging commissions for certain transactions. Mashinsky reportedly made the announcement at a Sept. 8 meeting for employees, where the company discussed possible scenarios for its future after filing for Chapter 11 bankruptcy in July.
A legal entity that represents Celsius’s creditors, called the Unsecured Creditors Committee, reportedly requested that the company continue to offer services such as loans, staking and custody. Maskinsky compared the possible return of the platform to those of Apple and Delta Airlines, which nearly went bankrupt in 1997 and filed for Chapter 11 in 2005, respectively.
Based on your current business model, Celsius said it did not charge any fees for transactions, withdrawals, origination or early cancellation. The memo quoted a person with knowledge of the matter as saying the committee raised concerns about Mashinsky’s involvement in Celsius and the proposed project; Kelvin.
“If the core of our business is custody, and our clients choose to do things like stake somewhere or trade one asset for another, or take a loan against an asset as collateral, we should have the ability to charge a fee,” Blonstein would have told Celsius employees.
Regulators have leveled accusations against Celsius amid bankruptcy proceedings in court. On September 7, the Vermont Department of Financial Regulation claimed that both the lending platform and Mashinsky misled state regulators about the company’s financial health and its compliance with securities laws. Users have also sought legal recourse to access more than $22.5 million in funds that have been in Celsius custody since withdrawals were frozen in June.
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