A leaked audio recording obtained by CNBC has revealed that bankrupt crypto lender Celsius Network is secretly plotting to create an IOU cryptocurrency to partially repay its customers. The audio, provided by a Celsius customer named Tiffany Fong and authenticated by former employees, captures co-founder Nuke Goldstein and CTO Guillermo Bodnar outlining a plan to issue 'wrapped tokens' representing the ratio of what customers are owed to what the firm still holds on its balance sheet.
A Familiar Repayment Strategy
Celsius halted all withdrawals, swaps and transfers on June 12, 2022, and filed for Chapter 11 bankruptcy a month later. The proposed IOU token mirrors the approach taken by Bitfinex after its 2016 hack: the exchange issued BFX tokens ('Recovery Right' coins) and fully repaid creditors by April 2017. Celsius intends to leverage its mining operations and staked ether (stETH) as underlying collateral, according to the audio.
Goldstein stated the plan would apply primarily to customers holding 'Earn' accounts. Bodnar described the IOU concept as being in its 'early stages,' but also detailed a parallel 'transaction management system' designed to enhance transparency: 'Transparency reflected not just in how we communicate, but making sure that everything that is done within our platform is traceable, is auditable, end to end — we don't have anything to hide,' he said in the recording.
CEL Token’s Weak Performance
Celsius already has a native token, CEL, which was supposed to be 'the backbone of the Celsius Network.' However, with a circulating supply of 423.4 million tokens, CEL has dropped 80.6% from its all-time high and recorded a 24-hour global trading volume of just $8.28 million. A short-squeeze attempt by CEL holders in July failed miserably.
Industry analysts caution that an IOU token alone cannot guarantee full recovery; the actual value depends on Celsius's asset liquidation proceedings. A court-appointed examiner is now overseeing the bankruptcy case, and Celsius has sought to reopen withdrawals for a select group of customers. Any final repayment plan will require creditor votes and court approval.
Do you think Celsius’s IOU strategy will succeed like Bitfinex’s? Share your thoughts in the comments.