One of the leading causes of this spring’s crypto meltdown, which wiped out roughly $1 trillion from the market and rendered thousands of investors bankrupt, was the failure of the experimental cryptocurrency bank Celsius Network. Before declaring bankruptcy, Celsius lost nearly a billion dollars in customer funds.
The firm’s CEO, Alex Mashinsky, is now working to restore its reputation as a great company. Celsius executives believe that by changing the name of their company, they can begin the process of redemption.
Comeback of Celsius
The failure of the innovative cryptocurrency bank Celsius Network was one of the primary causes of this spring’s crypto crash, bankrupting hundreds of investors. Celsius declared bankruptcy in July. It is now attempting to make a comeback.
1/ @CelsiusNetwork is launching a Custody solution for our US users and introducing some changes to our services. Read on to learn about what’s changing and why…
— Alex Mashinsky (@Mashinsky) April 12, 2022
According to The New York Times, Celsius CEO Alex Mashinsky presented a bold strategy to the staff on September 8th to help the company get back on track. He and another Celsius executive, Oren Blonstein, stated that they wanted to rebuild the company with a focus on custody. It would entail holding people’s cryptocurrencies and charging fees for specific transactions.
The 56-year-old Mr. Mashinsky was met with doubt from his coworkers. He drew parallels between Pepsi’s bankruptcy in 1923 and 1931 and the successful revival of other well-known companies in the following decades. Mr. Mashinsky asked employees.
“Does it make the Pepsi taste less good?”
“Delta filed for bankruptcy. Do you not fly Delta because they filed for bankruptcy?”
Celsius’s Relaunch Strategy
Mr. Mashinsky stated at the employee meeting that Celsius was working with the Committee of Unsecured Creditors, or UCC, on a plan to resume operations. The UCC is a committee that represents the company’s creditors in court. However, a source familiar with the situation claims that during a meeting with Celsius officials, the committee expressed concerns about Mr. Mashinsky’s continued employment with the company and severe doubts about the Kelvin plan’s viability. Accordingly, the committee’s attorneys chose not to comment.
Today, alongside the Unsecured Creditors Committee (UCC), made up primarily of customers, the U.S. Trustee, and a number of other key parties, we participated in the Second Day Hearing where we continued the dialogue around Celsius’ efforts to maximize value for our community.
— Celsius (@CelsiusNetwork) August 17, 2022
The specifics of Celsius’s restart strategy are unknown at this time. The corporation currently engages in Bitcoin mining, which it may incorporate into the reformed business. On the other hand, Mr. Mashinsky and Mr. Blonstein focused on meeting the potential storage of cryptocurrency assets for Celsius’s customers.
Celsius to Return as Custody Firm – Is It a Good Plan?
In 2021, Celsius had a million users and $20 billion in assets under its control. Celsius’s effort at a comeback begins as the cryptocurrency sector undergoes a period of transition, as the start-ups whose careless actions caused the crash attempt to recover. Do Kwon, inventor of the defunct cryptocurrency Luna, isn’t the only one who’s tried their hand at a new cryptocurrency venture in the months following the fall.
Celsius drew attention with a marketing promise of earning up to 18% interest on digital assets deposited. The company allowed customers to participate in “staking,” an investment strategy that enables cryptocurrency holders to receive rewards and take out loans using their deposits as collateral.
However, Celsius made risky trades to obtain high returns that quickly went wrong when the cryptocurrency market fell. As a result, tens of thousands of users’ digital assets are still locked on the network.
To sum up, for Mashinsky’s proposal to work, which involves renaming Celsius to Kelvin and offering custodial services, clients would need to trust the company so much that they would instead deposit their money with Celsius than in non-custodial wallets. This is not the first time the corporation has come up with a silly plan; it has already admitted in court that it was merely waiting for the bull market to resume before making good on its promise to refund its consumers.
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