The defunct cryptocurrency lender has proposed the idea of releasing a debt token to pay back creditors. The proposal is yet to gain approval from regulators. If the plan is accepted, the debt token will be known as the ‘asset equity token (AST).
Celsius Floats Plan to Pay Creditors with ‘Asset-Staking Token’
According to several reports and an article on Bloomberg on Jan. 24, Celsius’s lawyers have suggested that the company could become a publicly-traded revival enterprise and would use a debt token to repay creditors.
The concept was reportedly brought forward to creditors in September 2022. Leaked audio recordings summarizing the idea of a Celsius IOU token revealed that the IOU tokens could be similar to the AST plan. The tokens signify a portion of what customers owe to the firm and what remains on its balance sheet.
Celsius’s legal representative Ross M. Kwasteniet clarified that this proposal is not a complete recovery for creditors but could provide them with liquid assets. The AST could be traded like many other crypto assets.
Bankruptcy Judge Approves Withdrawal Request
This information follows the New York Attorney General Letitia James filing a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius, for allegedly deceiving investors. On the same day, the New York-based Chapter Court ruled that Celsius depositors’ funds are under the ownership of the rightful owner.
Court documents released on Tuesday also disclosed that Celsius was given permission to process a limited number of customer withdrawals. The bankruptcy court also authorized Celsius to distribute Flare Airdropped (FLR) tokens to clients who hold XRP.
What do you think about Celsius’s proposal to pay creditors with the help of an ‘asset participant token’? Please share your thoughts in the comments section.
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