Saturday, September 24, 2022

Celsius CEO Suggests Pivot to Custodial Services In Move Nobody Asked For

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Key Takeaways

  • Celsius CEO Alex Mashinsky wants to rebrand Celsius to “Kelvin,” according to the New York Times.
  • Under the plan, the company would pivot away from lending and offer crypto asset custodial services instead.
  • Celsius is currently in the middle of a bankruptcy process.

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Celsius executives believe the company can undertake a redemption arc by rebranding to a custodial services provider.

Mashinsky’s Grand Idea

Celsius is plotting a comeback that nobody asked for.

According to the New York Times, the crypto lending company’s CEO, Alex Mashinsky, floated on September 8 the idea of relaunching the firm, this time with a primary focus on crypto custody. The plan would involve rebranding Celsius to another unit of temperature, “Kelvin.”

The report stated that Mashinsky had compared his proposed pivot to the ones undertaken by world-famous brands, such as Pepsi and Delta Airlines, when they were faced with their own bankruptcies. “Does it make the Pepsi taste less good?” Mashinsky reportedly asked employees. “Delta filed for bankruptcy. Do you not fly Delta because they filed for bankruptcy?” 

Celsius chief compliance officer Oren Blonstein reportedly backed Mashinsky’s plan, comparing the company’s recent woes to a “hero’s journey,” a common trope in storytelling. “This hero has a mission—something that they want to accomplish. They experience an initial success, they stumble, fall short in some way and have this dark moment,” he stated. “If we are successful, it’s going to be a success story like one that’s never been seen before.” 

Once one of the largest lending companies in the crypto space, Celsius paused client fund withdrawals in early June, citing “extreme market conditions.” When the company later filed for bankruptcy, court documents revealed it was suffering from a $1.19 billion hole in its balance sheet—which was partially due to Mashinky directionally trading Bitcoin with customer funds against the advice of senior traders at the firm.

This is a situation neither Pepsi nor Delta Airlines ever found themselves in.

News of the company’s bankruptcy filing in July was met with outrage and threats of suicide from customers, some of whom claimed to have lost their life savings to the firm—a fact that Blonstein failed to address when talking about the company “[falling] short in some way.”

Mashinsky’s plan—rebranding Celsius to Kelvin and providing custodial services—would entail customers regaining such a high level of trust for the firm that they’d rather give their funds to it than keep their money in non-custodial wallets. It’s not the first time the company has had funny ideas: after all, it has already admitted in court that it was just waiting for the bull market to resume to repay its customers.

Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.

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Source Link: https://cryptobriefing.com/celsius-ceo-suggests-pivot-to-custodial-services-in-move-nobody-asked-for/?utm_source=category_feed&utm_medium=rss

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