Source: crypto lender Celsius Networks is looking for financing options from investors and exploring other strategic alternatives, like financial restructuring
Celsius Network, among the largest crypto lenders, has paused user accounts, citing extreme market conditions
The search for outside financing or a restructuring makes the liquidity crisis more consequential: Celsius is moving from restricting customer access to pursuing options that could determine how its liabilities are handled. Related reporting also described risky trades and bets alongside a reduction in its assets.
First-order effects
Celsius must negotiate with potential investors while customer accounts remain paused, putting its financing process at the center of any near-term path to restore operations.
Celsius's users and CEL holders face a more formalized distress process after the withdrawal freeze and token selloff exposed the lender's immediate liquidity pressure.
Second-order effects
Potential investors gain leverage because Celsius is seeking capital after restricting account activity, while restructuring becomes an alternative to a conventional financing round.
The suspension and CEL's drop increase the burden on other crypto lenders to demonstrate that customer withdrawals can be met during market stress.
Third-order effects
If lenders repeatedly respond to market stress by freezing accounts and restructuring liabilities, crypto lending's claim to offer accessible financial services will face a deeper credibility gap.
The episode points toward a market in which lending platforms are judged less by yield or token performance than by whether their liquidity arrangements withstand rapid withdrawals.
The trend: Crypto lending is being tested by whether platforms that promise easy access to funds can sustain that access when market stress triggers withdrawals.
.@CelsiusNetwork is working as quickly as possible and will share information as and when it becomes appropriate. Acting in the interest of our community remains our top priority.
If Celsius does end up declaring bankruptcy, all of the crypto deposits they're holding don't revert to the account holders because Celsius is not a real bank. It goes first to pay Celsius' bills. This could be the rug pull to end all rug pulls.
...In other news, the liquidation price on the Celsius Maker vault has moved down to $14k thankfully. This gives it more breathing room. They are apparently in talks with restructuring lawyers and are also looking for additional financing options https://www.wsj.com/... https://t…
What is the difference between community, users and clients? Why not say clients? Too formal/legal since you know you have already messed up? Clients can sue you for breaking the ToS but community is just all koombaya don't worry bro let's yolo it? https://twitter.com/...
The unlicensed and unregulated “crypto bank” that froze all withdrawals this week is now attempting to seek help with restructuring. For the layman, that means they're broke, can't pay their bills and may be on the verge of bankruptcy. https://www.wsj.com/...
At this point they will either be successful at turning it into a Ponzi scheme (most likely not), or they will fold (RIP). I dont see them being able to raise enough capital to cover redemptions. https://twitter.com/...
FT: “Several players in the market had a policy of not extending credit to Celsius even as they borrowed from it, according to people familiar with the matter.” https://www.ft.com/...
FT: “Celsius was also the holder of large amounts of stETH issued by another company, StakeHound, which became practically worthless when StakeHound lost the keys to the underlying ether.” https://www.ft.com/...
“Banks have learned from past crises and are now pretty careful and sophisticated about their asset-liability mismatches. It's a skillset and I don't know to what extent the crypto lending market has learned it yet,” https://www.ft.com/...
Celsius portrays itself as a simple company helping everyday investors achieve ‘financial freedom’ unavailable in mainstream finance. But Its woes, however, lie in complex, risky trades typically hidden in the bowels of Wall Street https://www.ft.com/... https://twitter.com/...
Behind the unravelling of Celsius lay complex, risky trades typically hidden in the bowels of Wall Street w/ @joshckoliver @ScottChipolina https://www.ft.com/...