Celsius CEO Alex Mashinsky says that entering Chapter 11 bankruptcy is just a test for the embattled lender and claims he has a three-step plan to successfully “restart” the business.
Mashinsky revealed the ambitious plan at a meeting with Celsius employees earlier this month. A recording of the event was sent by an anonymous source to crypto blogger and Celsius customer Tiffany Fong.
During the meeting, Mashinsky claimed that Celsius declaring bankruptcy (the firm entered Chapter 11 in July) is akin to other famous brands that found themselves in financial difficulties.
“How many of you guys drink Pepsi vs Coca Cola?” asked Mashinsky during the meeting (our emphasis).
“Well, Pepsi filed for bankruptcy twice, right? Does it make the Pepsi taste less good? Delta filed for bankruptcy, right? Do you not fly Delta because they filed for bankruptcy? So the point is, a bankruptcy filing is a test for the company – it’s a test of: should you come out or should you disappear?”
Since the crypto market crashed earlier this year, thousands of customers have been unable to access funds locked into the platform. Celsius itself reported that it still owed nearly $5 billion to its users.
Read more: Celsius manipulated CEL token to bolster balance sheet, filing says
According to Mashinsky, the Celsius community appears to be overwhelmingly in favor of the company coming out of bankruptcy and “continuing this movement.”
“The community is behind us. I have no doubt that we’ll have plenty of assets to manage, the question is, are we gonna give them the products they need? The services they need? Are we gonna design them properly?” he said (our emphasis).
“Are we gonna avoid other mistakes and learn from the mistakes of the past?”
Mashinsky has a three-step plan to relaunching Celsius
As reported by the New York Times (NYT), Mashinksy firmly believes the future of Celsius lies in custody – the storing of other people’s crypto.
And for that to happen, Mashinsky says three things need to happen:
- First the company needs to return deposits to people who are in custody. Mashinsky says the company is working out the details with the US Trustee and a judge still needs to agree any future action.
- Next, Celsius will need to return the rest of the coins, however, it will first have to figure out exactly how much it recovered and how it should be shared out. Again, before any of this happens, the firm needs to sign off any plan with those who hold equity in the company.
- Finally, he says, the firm needs to restart its services. This part of the process has been codenamed ‘Kelvin.’
Beyond this three-step plan, the exact details of what Celsius 2.0 will look like are far from confirmed.
As detailed by NYT, the company still has a bitcoin mining operation but the focus, for now, seems to be on a pivot to custody services and to earn money through commissions on certain types of trades.
“If the foundation of our business is custody, and our customers are electing to do things like stake somewhere or swap one asset for the other, or take a loan against an asset as collateral, we should have the ability to charge a commission,” said Cesius’ head of innovation, Oren Blonstein.
“There should be no problem with us generating revenues from this,” he added. “We will need to be able to successfully convince customers that Celsius is a place that they can park their assets and have trust. They will have to trust us as a company.”
Despite Mashinsky and Blonstein’s confidence in the company’s new beginnings, employees in attendance didn’t sound too sure.
According to one Celsius staff member, this switch to a fee and commission-based approach could constitute a violation of the trust built up by the business in its first few years.
In response to this concern, Mashinsky said: “A lot of people there probably was a lot of mistrust because we didn’t charge fees because people couldn’t understand. This is an opportunity to reset all of that and again, through the transparency, show everybody how the math works: where the coin is going step-by-step instead of asking them to trust us with everything the way we’ve done over the first five years.”
For more informed news, follow us on Twitter and Google News or listen to our investigative podcast Innovated: Blockchain City.