Tiffany Fong, who was a depositor on Celsius and lost a substantial amount on the platform shares on youtube audio files from Celsius. In order to shape transparency from the company as to what exactly is happening to their funds and how the company is planning to compensate them.
An audio leak from the Celsius Network introduces a “crypto-based solution” to repay Earn Customers, which involves the creation of I Owe you – IOU Wrapped Claims Tokens.
Tokenizing
In this audio file Nuke Goldstein, President of Celsius Network, discusses the company’s recovery plan to repay customers in Earn. He outlines Celsius Network’s proposed “crypto-based solution”, which includes the consolidation of all assets (into BTC, ETH, USDC & CEL), and the subsequent creation of “wrapped claims tokens” that represent the ratio between the amount that Celsius owes us and the amount they actually have.
These claims tokens can allegedly be sold on DEXs e.g. Uniswap, where their value in USD would ultimately be determined on the open market.
I Owe You
NUKE GOLDSTEIN states: “There will be a wrapped token that represents, you know, the IOU (“I Owe You”), how much we owe the users and the valuation of that”
IOU’s will simplify all different assets on Celius. Instead of owning 50 different coins to depositors, Celsius will owe depositors Bitcoin, Ethereum, USDC. Thereby spreading their assets across these. From then they could spread the token into a bucket consisting of XX% Bitcoin, XX% Ethereum and XX% USDC.
All these buckets, which are basically wallets that have everything that Celsius has, can repay the customers. If you are a depositor and want to redeem your funds you can, but if Celsius only has only a certain ratio (20% BTC), you have to redeem for BTC or can wait till there is more in the Celsius wallet.
Continuation of Celsius
Why would you wait? Because these wallets will replenish if there is revenue coming from mining, staking or coins that become liquid like ETH 2.0. Besides those wrapped tokens are probably going to be listed on markets, i.e. Uniswap. Where the market can decide if CxBTC will be worth something.
Bottom Line
Celsius wants to propose a mechanism that allows people immediate liquidity but does not propose how value will be generated. It looks like Celsius is putting all the coins together and socializing all losses between depositors and in order to become compensated you have to stay on their platform and wait.
If these wrapped tokens may potentially only be tradable on DEXs, this could pose an issue for customers who would like to promptly cash out, but do not have prior experience using DeFi protocols (Celsius is obviously a CeFi platform).
Please keep in mind that I received this audio on September 1, 2022; Celsius Network’s recovery plans may have evolved or shifted since this date.
