A Celsius recovery strategy is developed in the midst of a community-led squeeze-out effort
Simon Dixon, the co-founder of BnkToTheFuture, has suggested a recovery strategy similar to the one used by Bitfinex after its Bitcoin attack in August 2016 — enabling users to be paid for their losses with tokens related to the platform’s recovery.
BnkToTheFuture, the principal investor in Celsius, and Simon Dixon, the co-founder of BnkToTheFuture, have volunteered to aid the network by using the same “financial innovation” deployed in 2016 to rescue the cryptocurrency exchange Bitfinex from insolvency.
Although Dixon’s Saturday, June 18 announcement did not contain exact specifics of the recovery plan proposed to Celsius’ board and CEO Alex Mashinsky, he emphasised it would be identical to the one presented to Bitfinex after its August 2016 breach, which he says was addressed within nine months.
“I think that conventional finance will be unable to provide a quick solution for Celsius, just as Mt. Gox remains unsolved a decade later. I think this can only be handled with a solution based on financial innovation, similar to what we achieved with Bitfinex, which was settled within nine months and worked out very well for depositors.”
Due to the “short-term systemic effect on Bitcoin owners,” and as a stakeholder and lender of Celsius, Dixon said that he was “eager to help Celsius with a recovery plan.” “We have the expertise, licencing, and technology necessary to provide solutions,” he said.
BnkToTheFuture is an international online investing platform that enables investors to participate in financial technology businesses, funds, and other emerging alternative financial products. The website has an investment network of over 85,000 eligible individuals. In June of 2020, Celsius made a public offering of shares via the investing platform, garnering $20.46 million from 1039 investors.
The Bitfinex answer
Bitfinex disclosed in August 2016 that it had lost roughly 120,000 Bitcoin (BTC) due to a cybersecurity attack, resulting in a loss of approximately $72 million in client cash at the time. Dixon’s ideas for Celsius are inspired by his company’s remedies at the time.
Instead of pursuing liquidation procedures, Bitfinex devised a novel recovery scheme consisting of “promises to repay” in the form of BFX tokens to clients, which represented the value of the stolen funds.
These tokens were sold on the open market or may be kept for a future $1 per token refund, allowing consumers to effectively trade on the company’s recovery.
