Crypto lender Celsius Network might launch a new token, as it is mulling the idea of issuing a new one as part of its reorganization plans.
According to a report, the crypto lender is exploring the idea because it wants to use the new token for raising funds that would help it in paying off its creditors.
The reorganization plan
On Tuesday, Ross M. Kwasteniet, the attorney for Celsius, spoke in front of US bankruptcy judge Martin Glenn in a court hearing.
He stated that a publicly-traded and properly licensed company, such as Celsius, would be able to raise greater funds for its creditors via a new token than it would through the sale of its limited assets at current prices.
The lawyer further stated that the offers they had received for the individual assets of the crypto lender had not been compelling.
A discussion has been scheduled with the creditor groups of Celsius Network regarding this reorganization plan and there will be a vote on it.
However, it should be noted that the vote will not be binding on the bankruptcy court where its decision on the matter is concerned.
The plans of the lender about issuing a new token for evading financial troubles are certainly not new.
There have been other crypto companies that have also opted to take this route, which includes Bitfinex, the Bitcoin exchange that rolled out its LEO token back in 2019.
This was to make up for the losses the exchange had suffered due to its dealings with Crypto Capital, which is based in Panama.
A bitcoin mining pool based in Beijing, Poolin, had also paused withdrawals in September and had issued IOU (I Owe You) debt tokens for addressing the matter.
If Celsius’ reorganization plan gets the green light from the court, the assets of the new company would include bitcoin mining firms, other investments, and a portfolio of loans.
The attorney for Celsius said that the court filings that highlight the entire reorganization plan would be published this week.
The struggling crypto lender’s problems had come to light last year in July when it filed for bankruptcy, as its balance sheet had a hole of $1.2 billion.
The company has been accused of running a Ponzi scheme and has been dealing with claims from creditors.
Moreover, the company was also embroiled in a dispute with Core Scientific, the Bitcoin mining firm that also filed for bankruptcy in December, as it was no longer paying for its share of electric bills.
Earlier this month, the two companies had come to an agreement to close down 37,000 mining rigs that belonged to Celsius, as the cost of operating them had risen to $53,000 per day.
This month, Alex Mashinksy, the former CEO of Celsius, was also sued by Letitia James, the New York Attorney General.
She said that he had promised investors financial freedom, but had only led them to financial ruin in the long run.