The value of the Celsius (CEL) token jumped an incredible 33% in just a few minutes just before 4 a.m. ET on Wednesday, leading the crypto industry. By contrast, most major cryptocurrencies are down a percentage point or two today.
Speculative investors jumped in after news broke that Alex Mashinsky, CEO of Celsius Network, outlined a comeback plan for the company with employees last week. He wants to become a custodian for customers, charging fees for storing cryptocurrencies and for certain transactions.
The plan could be interesting, but Celsius Network is still in bankruptcy protection, and the outcome of that process is highly uncertain. Even if Mashinsky does stay in control, I don't know why customers would trust him or the company with their cryptocurrencies given the losses they've already taken by depositing tokens with the company.
The reality is the Celsius token needs to have an underlying business to create any value for the token. That's why traders are bidding up the token on even rumors of a business plan after the bankruptcy filing. But investors should be skeptical.
Celsius Network is still in bankruptcy court, and it could be months before that's resolved. In fact, the Federal Trade Commission asked to be part of the bankruptcy proceedings this week, which could prolong the process.
I'm definitely not buying the Celsius token today and think that this could ultimately be a cryptocurrency that goes to zero if Celsius Network doesn't emerge from bankruptcy soon.