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The Celsius Official Committee of Unsecured Creditors held a town hall on Twitter spaces to discuss various options to recover investors’ assets from the defunct Celsius platform.
Representatives from the Committee highlighted a number of asset recovery options proposed by account holders. Some of these paths include; the establishment of a litigation trust to pursue the former CEO, Alex Mashinsky, and the other founders of the defunct lender.
Secondly, they suggested the return of liquid crypto to smallholders (about 85% of actual account holders). Based on the suggestion, the remaining liquid crypto that was not used to provide recovery for smallholders will be transferred into a Trust or a recovery entity. The entity can then issue tokens that can be held by larger investors that participated with Celsius.
Thirdly, the Committee’s lawyer said Celsius has been facilitating conversations with potential investors for its mining business at its insistence. The plan is for Celsius to reorganize the mining business and its asset under new management and the value of the equity can be provided to account holders.
In addition, the lawyer said the Committee is looking towards winding down Celsius or transferring the crypto to a third party if some issues cannot be resolved.
The Business Model of Celsius
Celsius Network’s business model is based on generating revenue from loan interest and fees charged for its various services. The platform also incentivizes users to hold and use its native token, CEL, by offering rewards and discounts on its services.
In recent times, Shoba Pillay, a court-appointed examiner, submitted her final report on certain aspects of operations at the bankrupt cryptocurrency Celsius on January 31. Pillay wrote that the real operation of Celsius did not follow the business model that was promoted and sold to its clients.
Pillay discovered that the deceit had already started when the Celsius initial coin offering in March 2018 fell short of raising the anticipated $50 million, raising only $32 million instead.
Meanwhile, the attorney general of New York, Letitia James has initiated legal action against Mashinsky for deceiving and defrauding investors.
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