Convert debt into a new cryptocurrency
Ever since bankrupt crypto lender Celsius froze withdrawals in June, customer funds have been in limbo. Now, audio leak shared with CNBC reveals a preliminary plan to compensate them.
The company wants to issue an “IOU” cryptocurrency to customers who have signed up for some of its accounts.
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The recording was provided by Tiffany Fong, who says she is one of 500,000 Celsius customers with funds locked on the platform. Fong says she received the audio from a self-identified employee, who remained anonymous during their communications.
CNBC was unable to verify that the leaked audio is the entire exchange from an internal meeting on September 1. However, CNBC spoke to former employees who verified that the recording is genuine. In the audio, CTO Guillermo Bodnar says the plan is in its “early stages.” What is presented may have changed in the weeks following the call.
In the recording, Celsius co-founder Nuke Goldstein describes a compensation plan for clients who deposited assets into Celsius’ “Earn” account, for which Celsius had promised returns of up to 17%.
Goldstein said Celsius will release “wrapped tokens,” which will serve as IOUs for customers. The tokens represent the ratio of what Celsius owes customers to the assets they have. He said if customers waited to redeem their tokens, there was a better chance that the gap between what Celsius has and what it must will be smaller.
It’s a risky bet on an increase in value of a fledgling token from a company that just went bankrupt. Goldstein said the value is likely to rise as Celsius earns revenue from its mining business, staked ETH and other coins that may become liquid.
Celsius also intends to allow customers to trade these tokens, according to Goldstein. He said the tokens can be traded on Celsius for probably less value than what is owed to them or on crypto platforms like Uniswap, allowing the market to determine the value of the tokens.
In this photo illustration the Celsius Network logo seen displayed on a smartphone screen next to Bitcoin cryptocurrencies.
Raphael Henrique | SOPA Pictures | Light flare | Getty Images
Reimbursement isn’t the only plan Celsius has in the works. In part of the recording shared exclusively with CNBC, Bodnar said the company is also building a transaction management system, which is designed to track the company’s blockchain assets. This would include the assets, the price at which they were bought and how much they were worth when they were sold.
Celsius, which said it manages billions of dollars in client assets, has never had sophisticated software to properly manage and track its assets, sources close to the company say. These sources, who asked not to be named due to confidentiality constraints, also said the data was tracked manually, on a simple Excel spreadsheet.
On the call, Bodnar said the goal of implementing this new system is transparency.
“…[T]transparency reflected not only in the way we communicate, but also by ensuring that everything done within our platform is traceable, auditable, end-to-end – we have nothing to hide,” he said. -he declares.
Goldstein also pointed out that there was a lot of misinformation about the company circulating on Twitter and that employees should only trust information provided in court documents and town halls led by CEO Alex Mashinsky.
“If you go on Twitter, bring an umbrella because it’s raining bull—-out there,” Goldstein said. “This is your chance to get the truth. If we don’t tell you the truth about what we know, we’ll go to jail. Now I don’t know if we’ll go to jail… but that’s no good .”
In the Q&A portion of the event, one speaker asked where employees are at with regards to releasing their locked funds from the platform. Goldstein said employees won’t be prioritized over customers.
“Employees aren’t the last or the first,” Goldstein said. “You are a customer too. We are a customer. That means we are on the same level as the customers.”
CNBC reached out to Celsius for comment on its repayment plan and the status of its transaction management system, but the company did not respond.
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