Celsius has a Hail Mary bankruptcy plan: Turn its debt into a new cryptocurrency

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Customers’ funds were in limbo since bankrupt cryptocurrency lender Celsius halted withdrawals in June. now, leaked audio Sharing with CNBC reveals an initial plan for compensation to them.

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The company is looking to issue an “IOU” cryptocurrency to customers who have signed up for some of its accounts.

Recording was provided by tiffany fong, which says she is one of the 500,000 Celsius customers who have funds locked into the platform. Fong says he received audio from a self-identified employee who remained anonymous during their communication.

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CNBC was not able to verify that the leaked audio is the entire exchange from an internal meeting on Sept. However, CNBC spoke with former employees who verified that the recording is authentic. In audio, Chief Technology Officer Guillermo Bodnar says the plan is in an “early stage”. What has been scheduled may change in the weeks following the call.

In the recording, Celsius co-founder Nuke Goldstein outlines a compensation plan for clients who deposited assets in Celsius’ “earnings” account, for which Celsius promised yields of up to 17%.

Goldstein said Celsius will issue a “wrapped token,” which will act as an IOU for customers. The tokens represent the ratio between Celsius owed to customers and the assets available to them. He added that if customers wait to redeem their tokens, there is a better chance that the difference between what Celsius holds and what it owes will narrow.

This is a risky bet on increasing the value of a nascent token from a company that is currently going through bankruptcy. Goldstein said the value is likely to rise as Celsius has revenue coming from its mining business, staked ETH and other coins that may be liquid.

According to Goldstein, Celsius also wants to allow customers to redeem these tokens. He added that tokens can be redeemed at a value less than their outstanding value on Celsius or on crypto platforms such as Uniswap, allowing the market to determine the value of the token.

Reimbursement isn’t the only plan Celsius has in the works. In a portion of the recording shared exclusively with CNBC, Bodnar said that the company is also building a transaction management system designed to track the company’s blockchain assets. This would include the assets, the price at which they were purchased and how much they were worth when they were sold.

Celsius, which said it managed billions of dollars in client assets, never had sophisticated software to properly manage and track its assets, according to sources familiar with the company. These sources, who asked not to be named due to privacy restrictions, also said that the data was being tracked manually on a simple Excel spreadsheet.

On the call, Bodnar said that the goal of building this new system is transparency.

,[T]Transparency is not only reflected in how we communicate, but it ensures that everything we do within our platform is traceable, audible, end to end – we have nothing to hide ,” They said.

Goldstein also emphasized that there was a lot of misinformation circulating about the company on Twitter and that employees should only rely on court documents and information provided at the town hall run by CEO Alex Mashinsky.

“If you go on Twitter, bring an umbrella because it’s raining bulls,” Goldstein said. “This is your opportunity to get to the truth. If we don’t tell you the truth we know – we go to jail. Now, I don’t know if we go to jail… but that’s no good.”

In the Q&A portion of the incident, a questioner asked where the employees stand in terms of releasing their locked funds from the platform. Goldstein said employees will not be given priority over customers.

“Employees are not the last or the first,” Goldstein said. “You are also a customer. We are a customer. That means we are on the same level as customers.”

CNBC reached out to Celsius for comment about their reimbursement plan and the status of their transaction management system, but the company did not respond.

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