The collapse of the experimental cryptocurrency bank Celsius Network was one of the main drivers of this spring’s crypto crash, which erased nearly $1 trillion from the market and ruined thousands of investors.
Celsius filed for bankruptcy in July. Now it’s angling for a comeback.
At a meeting with employees Thursday, Alex Mashinsky, the CEO of Celsius, outlined an audacious plan to revive the firm, according to a recording of the event shared with The New York Times. He and Oren Blonstein, another Celsius executive, said they hoped to rebuild the company with a focus on custody — storing people’s cryptocurrencies for them, and then charging fees on certain types of transactions.
Mashinsky, 56, faced skeptical questions from employees. He compared the rebuilding process to corporate turnarounds at some of the world’s most famous brands, including Pepsi, which went bankrupt in 1923 and 1931.
“Does it make the Pepsi taste less good?” Mashinsky asked employees. “Delta filed for bankruptcy. Do you not fly Delta because they filed for bankruptcy?”
In a statement, a Celsius spokesperson said that the company regularly holds internal meetings to “prepare for all scenarios.”
“Our employees are central to our efforts,” the statement said. “We will continue to rely on them to assist in preparing whatever requirements would be necessary to execute the final recovery plan as quickly as possible.”
Celsius rose to prominence with a marketing promise that proved impossible to sustain: Deposit your digital assets and receive interest as high as 18%. The company also let customers take out loans using their deposits as collateral and participate in “staking,” an investment maneuver that allows users to earn rewards on crypto holdings. In 2021, Celsius controlled assets worth $20 billion and had 1 million customers.
But Celsius generated its high returns by making risky investments that quickly turned sour when the crypto market crashed. In court this summer, Celsius reported that it owed customers $4.7 billion.
Celsius’ fate is not really in Mashinsky’s hands. Any proposal would require approval by the federal bankruptcy judge in New York, Martin Glenn, who is overseeing the process. The outcome could take a number of forms, such as a buyer purchasing parts of the company.
(This story first appeared in New York Times or c.2022 The New York Times Company)
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