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The company also discussed other possible scenarios for its future after filing for Chapter 11 bankruptcy.
Cryptocurrency lending Celsius, currently engulfed in bankruptcy proceedings, is reportedly planning to rebuild as a crypto custody business.
According to a report, the custody project, code-named ‘Kelvin’, which would store users’ crypto and charge clients fees for certain transactions, was presented to the company on September 8 by Celsius CEO Alex Mashinsky and the head of innovation and chief compliance officer Oren Blonstein.
The company also reportedly discussed other possible scenarios for its future after filing for Chapter 11 bankruptcy in July.
Celsius had previously not charged customers any fees for transactions, withdrawals, and origination or early termination, something which was used as a sales pitch to ask customers to “unbank” from traditional finance.
According to a source with knowledge of the situation quoted in the report, the committee voiced its doubt regarding Mashinsky’s connection with Celsius and the projected Kelvin project.
“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,” Blonstein said at the meeting.
Mashinsky also reportedly compared the company’s potential resurgence in the meeting to the successes of other once bankrupt companies including PepsiCo Inc and Delta Air Lines Inc.
“Does it make the Pepsi taste less good?” Mashinsky asked in the meeting. “Delta filed for bankruptcy. Do you not fly Delta because they filed for bankruptcy?” he stated.
In June, Celsius filed for Chapter 11 bankruptcy in the Southern District of New York, including its cryptocurrency mining division.
The company claimed that by doing so, it would be able to “stabilize its business and complete a comprehensive restructuring transaction that maximizes value for all stakeholders.”
Financial regulators in Vermont recently suggested that the crypto lending company occasionally resembled a Ponzi scheme by asserting that it deceived investors about its financial standing and occasionally used new investors’ funds to pay out existing ones.
Additionally, users have resorted to the judicial system to obtain access to more than $22.5 million in funds that Celsius has been holding since freezing withdrawals in June.