Defunct crypto ranger Celsius is exploring the possibility of creating a debt token to repay creditors. The plan must be approved by regulators, but if approved by the trustee and financial authorities, the debt tokens would be called “Asset Share Tokens (ASTs).”
Celsius proposes “Asset Share Tokens” as a creditor repayment plan, subject to regulatory approval
Variouspress reportsincluding aop-edon the matter published by Bloomberg on January 24revealed that Celsius’ lawyers want the bankrupt company to become a publicly traded rehabilitation company that can issue debt tokens to repay creditors The report revealed that he detailed that.
According to Celsius attorney Ross M. Quastenito, the plan and the new assets will be called “asset share tokens” (AST). Specifically, Celsius’ creditors who meet certain threshold requirements will be eligible to receive ASTs. Allegedly, this is not the first time Celsius has considered issuing IOU tokens.
Executives are said to have floated the idea to creditors in September 2022. A leaked audio file summarizing Celsius’ IOU token idea showed that IOU tokens are similar to the AST concept. The token would essentially represent the ratio of what the customer owes to what the company has left on its balance sheet.
The Asset Share Token (AST) would not give creditors a full recovery and they would receive a haircut of what they are owed. According to Celsius attorney Ross M. Quastenito, while it may not be a full recovery, the proposal would be beneficial to creditors looking for liquid assets. He noted that ASTs, like many crypto assets today, are readily tradable.
Bankruptcy Judge Grants Request to Withdraw
The news follows a lawsuit filed by New York Attorney General Letitia James against Alex Mashinsky, co-founder and former CEO of Celsius, for allegedly misleading investors. On the same day, a New York bankruptcy court ruled that Celsius owns the rights to the depositors’ funds.
Tuesday’s
court filingfurther indicates that Celsius was approved to handle some of the customers’ withdrawals. The bankruptcy court also gave Celsius permissionto distributeairdropped flare (FLR) tokens to customers who heldXRP.
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