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Celsius Network LLC is considering issuing a new digital-asset token to repay creditors as part of a proposal to reorganize and exit bankruptcy as a regulated crypto platform, the company said in court yesterday, Bloomberg News reported. Reorganizing Celsius into a publicly-traded company that is properly licensed would bring in more money for creditors than selling hard-to-liquidate assets at today’s depressed prices, company attorney Ross M. Kwasteniet said during a video-court hearing. Celsius has been negotiating with various creditor groups over how to set up the new company and issue a new token to creditors as part of a payout plan, Kwasteniet told US Bankruptcy Judge Martin Glenn, who is in New York. Another troubled crypto platform had created digital assets to cover customer losses, but Celsius is likely the first crypto company to try to issue a new token — which must be blessed by a federal judge — to help buy its way out of bankruptcy. A group of creditors has been pushing Celsius to follow the example set by the Bitfinex exchange, which issued new tokens to customers who lost money due to a hack. In September, a Beijing-based provider of Bitcoin mining-pool services said it would issue tokens to clients equal to the value of various crypto assets that had been frozen.

Binance Holdings Ltd., the world’s largest crypto platform, acknowledged that it mistakenly keeps collateral for some of the tokens it issues in the same wallet as exchange-customer funds, Bloomberg News reported. Reserves for almost half of the 94 coins that Binance issues, known as Binance-peg tokens or “B-Tokens,” are currently stored in a single wallet called “Binance 8” which also holds customer assets, according to listings visible on its website on Monday. The wallet contains significantly more tokens in reserve than would be required for the amount of B-Tokens that Binance has issued, indicating that collateral is being mixed with customers’ coins rather than being stored separately, as has been done for other Binance-peg tokens according to the company’s own guidelines. “‘Binance 8’ is an exchange cold wallet. Collateral assets have previously been moved into this wallet in error and referenced accordingly on the B-Token Proof of Collateral page,” a Binance spokesperson said. “Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets.” Crypto exchanges such as Binance have attempted to be more transparent about their holdings following the collapse of rival platform FTX in November, which turned the management of reserves into a hot-button issue for the crypto industry. FTX, the Bahamas-based exchange founded by Sam Bankman-Fried, allegedly allowed its sister trading firm Alameda Research unfettered access to customer assets to fuel its own bets — and with billions of dollars at stake, customers are eager to spot any potential warning signs of trouble elsewhere.

Bankrupt crypto lender BlockFi had over $1.2 billion in assets tied up with Sam Bankman-Fried’s FTX and Alameda Research, according to financials that had previously been redacted but were mistakenly uploaded yesterday without the redactions, CNBC.com reported. BlockFi’s exposure to FTX was greater than prior disclosures suggested. The company filed for Chapter 11 bankruptcy protection in late November, following the collapse of FTX, which had agreed to rescue the struggling lender before its own meltdown. The balance shown in the unredacted BlockFi filing includes $415.9 million worth of assets linked to FTX and $831.3 million in loans to Alameda. Those figures are as of Jan. 14. Both of Bankman-Fried’s firms were wrapped into FTX’s November bankruptcy, which sent the crypto markets reeling. Lawyers for BlockFi had said earlier that the loan to Alameda was valued at $671 million, while there were an additional $355 million in digital assets frozen on the FTX platform. Bitcoin and ether have since rallied, lifting the value of those holdings.

Over the past few years, a number of companies have attempted to act as the cryptocurrency equivalent of a bank, promising lucrative returns to customers who deposited their bitcoin or other digital assets, according to an Associated Press analysis. In a span of less than 12 months, nearly all of the biggest of those companies have failed spectacularly. Last week, Genesis filed chapter 11, joining Voyager Digital, Celsius and BlockFi on the list of companies that have either filed for bankruptcy protection or gone out of business. This subset of the industry grew as cryptocurrency enthusiasts were looking to build their own parallel world in finance untethered to traditional banking and government-issued currencies. But lacking safeguards, and without a government backstop, these companies failed in domino-like fashion. What started with one crypto company collapsing in May spilled over onto one crypto lending firm and then the next. Further, government regulators started clamping down on crypto lending companies’ ability to advertise their services, saying that their products should have been regulated by securities regulators. The collapse is reminiscent of the 2008 financial crisis, but on a much smaller scale. There are no worries that the collapse of these crypto firms will impact the broader economy.

Rockley Photonics Holdings Ltd., which makes microchips that can be used in wearable health monitoring devices, filed for bankruptcy with a creditor-backed plan that will hand control of the business to bondholders, WSJ Pro Bankruptcy reported. Publicly traded Rockley said in court papers filed Monday in the U.S. Bankruptcy Court in New York that it has won support for a chapter 11 plan of reorganization under which bondholders who are owed roughly $119 million will forgive that debt in exchange for equity in the reorganized business. Bondholders also agreed to provide Rockley with $35 million in new financing in the form of a chapter 11 exit loan and private placement agreement offering bondholders the right to purchase an additional $20 million of the reorganized company’s stock. Rockley said the restructuring plan was negotiated and agreed to following a monthslong marketing process spearheaded by the company’s investment banker, Jefferies LLC. Rockley said that although it has developed groundbreaking silicon photonics chips that can be used in wearable health monitoring devices, the company has yet to bring any products to market. The company said it is working with other businesses on specific designs for its chips and it has shipped some early prototypes, anticipating the chips will ultimately be used in wearable health monitoring devices. President and Chief Executive Richard Meier said in a sworn statement that Rockley recorded net losses of $117 million in the nine months ended Sept. 30. Mr. Meier said the chapter 11 plan is a significant achievement given Rockley’s liquidity issues and added the restructuring should ensure the company’s long-term viability.