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Turn its debt into a new cryptocurrency


Celsius wants to issue a cryptographic IOU to customers who have signed up for certain accounts.

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

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

Post provided Tiffany Fong, who says she is one of the 500,000 Celsius customers whose funds are locked up on the platform. Fong says she received the audio from a self-identified employee who remained anonymous during their interaction.

CNBC was unable to confirm that the leaked audio recording represents the entire conversation from the Sept. 1 internal meeting. However, CNBC spoke to former employees who confirmed the authenticity of the recording. In the audio, Chief Technology Officer Guillermo Bodnar says the plan is “at an early stage.” What is stated could have changed in the weeks following the call.

In the post, Celsius co-founder Nuke Goldstein lays out a compensation plan for clients who deposited assets in the Celsius “Earn” account, for which Celsius promised returns of up to 17%.

Goldstein said Celsius will issue “wrapped tokens” that will serve as an IOU to customers. Tokens represent the ratio between what Celsius owes customers and the assets they have. He said that if customers wait to redeem their tokens, there is a better chance that the gap between what Celsius has and what it owes will be smaller.

It’s a risky bet to increase the value of a nascent token from a company that just went through bankruptcy. Goldstein said the value is likely to rise because Celsius is generating income from its mining business, staking ETH and other coins that could become liquid.

According to Goldstein, Celsius also intends to allow customers to redeem these tokens. He said the tokens could be redeemed on Celsius for a value likely less than what they owe, or on crypto platforms like 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 the Bitcoin cryptocurrency.

Rafael Enrique | SOPA images | Light rocket | Getty Images

Compensation isn’t the only plan Celsius is developing. In part of the recording, shared exclusively with CNBC, Bodnar said the company is also building a transaction management system that is designed to keep track of the company’s assets on the blockchain. This will include the assets, the price at which they were purchased and how much they cost when sold.

Celsius, which said it manages billions of dollars of client assets, has never had sophisticated software to properly manage and track its assets, according to people familiar with the company. Those sources, who asked not to be named for privacy reasons, also said the data was manually tracked in a simple Excel spreadsheet.

During the telephone conversation, Bodnar said that the goal of this new system is transparency.

“…[T]Transparency is reflected not only in how we communicate, but also in ensuring that everything that is done on our platform is tracked, verified from start to finish – we have nothing to hide,” he said.

Goldstein also stressed that a lot of misinformation about the company is circulating on Twitter and that employees should only rely on information provided in court documents and city halls, which are run by CEO Alex Mashinsky.

“If you go to Twitter, take an umbrella with you because it’s bull raining there,” Goldstein said. “This is your opportunity to find out the truth. If we don’t tell you the truth about what we know, we’ll be put in jail. Now I don’t know if we’re going to jail… but that’s not good.”

In the Q&A part, one respondent asked what the position of employees is in terms of releasing their blocked funds from the platform. Goldstein said employees would not be prioritized over customers.

“Employees are not last or first,” Goldstein said. “You are also a customer. We are a client. This means that we are on the same level with the customers.”

CNBC reached out to Celsius for comment on their refund plan and the status of their transaction management system, but the company did not respond.

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