Turn his debt into a new cryptocurrency

Celsius plans to issue 'IOU' crypto to customers who signed up for specific accounts

Since bankrupt cryptocurrency lender Celsius froze withdrawals in June, customer funds have been in limbo. Now leaked audio shared with CNBC reveals a tentative plan to compensate them.

The company wants to issue an “IOU” cryptocurrency to customers who have signed up for some of its accounts.

The recording was done by Tiffany Fong, who says she is one of the 500,000 Celsius customers with money on the platform. Fong says she received the audio from a self-proclaimed employee, who remained anonymous during their communication.

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 have verified the recording is authentic. In the audio, Chief Technology Officer Guillermo Bodnar says the plan is at an “early stage.” What’s mapped out may have changed in the weeks since the call.

In the recording, Celsius co-founder Nuke Goldstein outlines a compensation plan for customers who deposited assets into Celsius’ “Earn” account, for which Celsius promised returns of up to 17%.

Goldstein said Celsius will release “packaged tokens,” which will serve as an IOU for customers. The tokens represent the ratio between what Celsius owes customers and what assets they have available. He said that if customers wait to redeem their tokens, it is more likely that the gap between what Celsius has and what it owes will narrow.

That’s a risky bet on a rise in value for a nascent token from a company that just went bankrupt. Goldstein said the value is likely to rise as Celsius has income from its mining operations, ETH and other coins that may become liquid.

Celsius also plans to let customers redeem these tokens, according to Goldstein. He said the tokens can be exchanged on Celsius for a value likely to be less than what they are owed or on crypto platforms such as Uniswap, allowing the market to determine the value of the tokens.

In this photo illustration, the Celsius Network logo is displayed on a smartphone screen next to Bitcoin cryptocurrencies.

Rafael Henrique | SOPA images | Light rocket | Getty Images

The fee isn’t the only plan Celsius has in the works. In a portion of the recording shared exclusively with CNBC, Bodnar said the company is also building a transaction management system designed to track the company’s blockchain assets. That includes the assets, the price at which they were bought, and how much they were worth when they were sold.

Celsius, which said it managed billions of dollars in customer assets, has never had sophisticated software to properly manage and track its assets, according to sources familiar with the company. These sources, who asked not to be named due to confidentiality restrictions, also said the data was manually maintained in a simple Excel spreadsheet.

During the call, Bodnar said the goal for building out this new system is transparency.

“…[T]transparency is reflected not only in the way we communicate, but also in ensuring that everything done within our platform is traceable and auditable from start to finish – we have nothing to hide,” he said.

Goldstein also stressed that there is a lot of misinformation about the company circulating on Twitter and that employees should only rely on information contained in court documents and CEO Alex Mashinsky’s town halls.

“If you go to Twitter, bring an umbrella, because it rains there,” Goldstein said. “This is your chance to find out the truth. If we don’t tell you the truth about what we know, we’re going to jail. Now, I don’t know if we’re going to jail…but it’s not right.”

In the Q&A section of the event, an inquirer asked where employees stood regarding releasing their blocked funds from the platform. Goldstein said employees will not be prioritized over customers.

“The workers aren’t the last or the first,” Goldstein said. “You are also a customer. We are a customer. That means we are on the same level as the customers.”

CNBC contacted Celsius for comment regarding their repayment plan and the status of their transaction management system, but the company has not responded.

WATCH: Bitcoin Drops Below $19,000

Bitcoin Plunges Below $19,000, And Kraken's New CEO David Ripley On Corporate Culture: CNBC Crypto World

Leave a Comment