On Monday, June 13, 2022, the crypto economy fell below $1 trillion territory as the bulk of crypto assets lost between 10% and 25% over the past 24 hours. Meanwhile, the crypto community has been discussing the cryptocurrency lending application Celsius amidst rumors of insolvency; on June 12, around 10:10 PM ET, Celsius announced that it had suspended “all withdrawals, swaps, and transfers between accounts”
Celsius suspended its lending application operations and the Crypto community is talking about bankruptcy and possible liquidation
On Sunday evening, lending company Celsius published a tweet detailing certain operations on the suspended platform.” Due to extreme market conditions, today we are announcing that Celsior is suspending all withdrawals, swaps, and transfers between accounts.” Celsior clarified,
“We are taking this action today to put Celsior in a better position, in the long term, to meet its withdrawal obligations,” Celsior added. The company also published a blog post explaining that Celsior is taking steps to remedy the situation.
“We are taking this necessary step for the benefit of our entire community to stabilize liquidity and operations while taking steps to preserve and protect our assets,” Celsiusblog postnoted.” Additionally, you will continue to earn rewards during the pause, in line with our commitment to our customers.”
Rumors of Celsius’ potential insolvency and speculation about the company’s financial problems began well before the company suspended operations; Mike Dudas, former CEO of The Block Crypto news publication, said the company suspended withdrawals The day before the company stopped withdrawals, Mike Dudas tweeted about the “demise of Celsius.”
“I’m saddened by how many people are cheering on the demise of [Celsius Network],” Dudas tweeted. “I, along with many others, advised people not to put their money in that dangerous business. I did. But many did. And many retailers appear to be quickly reeling. We all lose.”
But Celsius founder and CEOAlex MashinskyAlex Mashinsky was offended by Dudas’ tweet and responded, “I’m sorry.” Mike …… Do you know even one person who is in trouble for leaving Celsius?” Mashinsky, 34, asked (35). ‘Why are you spreading FUD and misinformation? If you are being paid for this, let everyone know that you stand on one side or the other. Otherwise, our job is to fight Tradfi together…”
Additionally, there is speculation that roughly $500 million of Celsius’ money is locked into the Maker protocol for leverage.” Celsius Network has 17,919 WBTC leveraged in Maker protocol,” a Twitter individualwrote. “This position faces liquidation at $22,584/$BTC$278 mil DAI debt, which makes it the largest individual debt position in the protocol.”
Blockstream’s Adam Buckrespondedto the tweet, saying, ” I’m assuming this is a defi, BTCyield strategy. can’t (Celsius Network) pull DAI out of any yield/staking and unwrap DAI to get WBTC out. no term lockup on DAI staking. Hopefully,” Buck added.
Estimated over $1 billion kept in Celsius wallets, Crypto Lender Nexo proposes to buy Celsius assets
Larry Cermak, Vice President of Research at The Block Crypto,compiled a database of Celsius walletsand concluded that $1.5 billion is sitting in these accounts.” Keep in mind that there may be mistakes. This list may not be complete and may have been mislabeled over the years of tracking,” Cermak added
Another personcompiled Cermak’s listand found that there was approximately $1.3 billion kept in Celsius’ wallet. In addition to these rumors and speculation, Celsior’s competitors have offered to purchase the company’s assets; Nexo AG has submitted an open letter to the Celsior Network, making a formal offer.
“After what appears to be the insolvency of [Celsius Network], and bearing in mind the repercussions for its private investors (and) the crypto community, Nexo extended a formal offer to acquire the qualified assets of [Celsius Network] after their withdrawal freeze We have done so.” Nexo explained in a letter attached to the tweet and
“We have been operating a “sustainable business for over 4 years and based on solid fundamentals and prudent risk management, Nexo is in a strong liquidity and capital position, as evidenced by the only real-time reserves certification of a blockchain finance company.” The company added
The company concluded that acquiring all or part of Celsius’ assets would play a major role in providing immediate liquidity to the “Celsius Network.” Nexosaid it isawaiting a response from Celsius Network management regarding a formal offer.
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