This analyst decodes the mystery behind Celsius’ crippling meltdown
It is true the bear market is raining down on the entire cryptocurrency market. But the devastation has been more painful for some. Celsius is certainly a leading highlight of the crippling crypto institutions that is rumored to be edging towards insolvency.
Celsius had more than $8 billion lent out to clients and $12 billion in assets under management by May 2022, according to the company. However, rumors about insolvency started spreading after it announced the freezing of account transactions.
Celsius announced on 12 June evening that withdrawals and transfers between accounts will be frozen, citing ‘extreme market conditions’. This move saw over $11.8 billion in customer assets being frozen. Five days in and the assets are still not released amid a huge crypto market turmoil.
CEO Alex Mashinsky even confirmed that exposure to the Terra debacle was ‘small’ after his firm’s early exit.
The major error appears to be the investing customers’ ETH in Lido Finance as staked Ethereum or stETH. However, the crypto crash led to the massive dumping of stETH and 1 stETH was no longer redeemable for one ether. This jeopardized the position of Celsius.
“Celsius promised customers between 6% and 8% returns on ether deposits. It had at least $450 million in stETH in its primary DeFi wallet, but likely has more stored elsewhere,” according to Andrew Thurman, Analyst at Nansen.
The clock is ticking for Celsius right now but a prominent analyst has a different theory for its crisis.
Crypto analyst “Plan C” alleges a different theory for the Celsius crisis. The analyst believes that two key players namely, FTX and Alameda Research, conspired to the demise of Celsius. He cut open the wounds of the Terra crash when TFL CEO Do Kwon was looking
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