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Celsius Plans to Pay Creditors with a Bankruptcy Crypto Token

source-logo  thecryptobasic.com 25 January 2023 05:23, UTC

Celsius may issue a Bankruptcy Crypto Token to overcome its problems.

Bloomberg reports that the bankrupt cryptocurrency lending platform Celsius Network LLC is proposing a way out of its current circumstances. Part of the proposal includes issuing a new digital asset to creditors affected by the challenges it faced in 2022. The aim is to allow the company to reorganize and exit its current status.

Celsius’ plan, which it said will take months to execute, will issue an Asset Share Token (AST) to creditors with locked tokens above a certain threshold. The tokens will be issued to reflect the value of individual assets of creditors and can be held by them to qualify for dividend payments over time, or sold in the open market.

Presenting the matter in court, the company’s lawyer said that creditors will earn more money if Celsius is reorganized into a properly licensed publicly-traded company. The attorney noted that such will be a better option than selling the company’s assets that are already hard to liquidate.

The threshold to qualify for receiving the proposed digital asset is yet to be made public. However, the plan remains at a proposal level as no approval has been received from the U.S. Trustee’s Office or any other regulator.