Coinbetter: Celsius explodes, Cefi’s financial management in crisis of confidence


June 21, 2022 – On-chain data shows that crypto lending platform Celsius transferred 3,500, 2,500, and 3,500 WBTC to the FTX exchange at 6:48 a.m., 7:19 a.m., and 9:29 a.m. on the same day.

Meanwhile, the address marked Celsius (0x87a67e7dc32fdc79853d780c6f516312b4a503b5) transferred 50,000 ETH (about $66.97 million) to FTX 3 hours before the suspension of withdrawals and other operations (at 7:23 p.m.).

According to crypto KOL revelations on social media, the suspected Celsius address (0x87a67e7dc32fdc79853d780c6f516312b4a503b5) lent 278,490,418.9 DAI by pledging 17,919.37 WBTC in the Maker deal, a position that reached $22 in BTC, 584 USD while the position may be at risk of liquidation over $400 million.

On June 13 at 02:10 (UTC), Celsius announced the suspension of withdrawals, transactions and transfers due to today’s extreme market conditions.

Every bullish and bearish transition cycle will experience the pain of deleveraging, there are always people or institutions that fall victim to it, 2018 is Fcoin, 2022 is Celsius?

“History doesn’t repeat itself but it often rhymes, ‘You might not want to see Celsius explode, sorry, it really happened!

First, let’s learn the Celsius platform, Celsius is a centralized crypto financial platform, users deposit crypto assets to get fixed income, Celsius promises to give depositors up to 8% ETH deposit income , then to take it for investment, so the ETH held through Lido participated in the ETH 2.0 pledge to earn interest.

stETH is a derivative token issued at a 1:1 ETH pledge when participating in the ETH 2.0 pledge via Lido, and can be exchanged for ETH upon expiry. stETH-ETH pools were available on Curve before the launch of ETH 2.0 stETH. And AAVE also accepts secured loans from stETH up to 73% ETH. So stETH frees up ETH liquidity early and adds liquidity that wouldn’t otherwise exist.

In 2021, Celsius gave Eth2.0 pledge solutions company Stakehound 35,000 ETH, only for Stakehound to lose the key to those 35,000 ETH, and growing concerns of this opacity eventually led to a run – the 5 last weeks total withdrawals were 190,000 ETH, compared to an inflow of 50,000 ETH in the previous 5 weeks.

In 2021, Celsius gave Eth2.0 pledge solutions company Stakehound 35,000 ETH, but Stakehound lost the key, and concerns over this opacity continued to escalate, eventually leading to a race – withdrawals totals in the last 5 weeks were 190,000 ETH, compared to an inflow of 50,000 ETH in the previous 5 weeks.

Celsius has a total of 1 million ETH, but only 29% is available to provide sufficient liquidity, another 324,000 ETH is locked in ETH 2.0 contracts for at least a year before it can be redeemed, and 458,000 ETH is stETH, and only 287,000 ETH can be subscribed at the prevailing Curve exchange rate. Celsius had to sell stETH on Curve to recover ETH.

However, institutions such as Alameda Capital recently dropped stETH from Curve’s stETH-ETH trading pool, with $1.5 billion from Alameda alone, so the price of stETH was also reduced (below of $0.95), further pushing stETH investors to kill under panic pressure. The fact that there are only 250,000 ETH left to exchange for stETH adds to the headache.

Coinbetter thinks Celsius is blowing up on the fact that Celsius hasn’t saved enough legacy assets to deal with the hack and run problem, and now the negative news of the loss of 35,000 ETH keys has caused the Celsius run, and after the run it will be forced to liquidate its assets to increase market pressure, which in turn will cause a vicious circle.

CelsiusNetwork is one of the well-known CeFi funding platforms in the US, with at least 1M+ ETH in funding. But there are actually many such CeFi funding platforms, which may also cause other funding platforms to pose similar problems to stETH, which will lead to a crisis of confidence in Cefi funding platforms.

Many in the crypto community compare the stETH unpeg to the UST unpeg. Coinbetter believes that unpecking from stETH occurs in extreme cases and is not really comparable unless there is a collapse in trust.

Coinbetter: Celsius Blows Up Will Accelerate Legislative Regulation of Cefi Platforms in Various Countries Around the World

Celsius, as a wealth management platform, has no legal regulation or transparency, with only 2019 and 2020 financial reports published and no updates to date. This stETH anchor will spur governments to move faster with legislative regulation of the Cefi platform.

Coinbetter said the platform’s wealth management business operations are currently normal, we ourselves have strengthened the risk of running on financial products, users do not need to worry and worry about asset security.

If you have any ideas or questions about Celsius explosions, please don’t hesitate to contact us.

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