Bitcoin Forum

Users of the crypto lending platform have finally felt some relief following Celcius Network's announcement that it has paid a total of $114 Million of its Bitcoin loan in the last 24 hours, lowering its liquidation price to $4,967

This means that the Bitcoin price must fall below $4,967 before Celcius is liquidated.


Source/Continue Reading: https://mycryptoparadise.com/less-anxiety-as-celcius-paid-114-million-of-its-bitcoin-backed-loan-in-24-hours/

Information you used is outdated. Currently the liquidation price of Celcius position is much much lower. It's $2,772.

With this liquidation price, I think risk for Celcius is zero. This is a booster for Bitcoin market to recovery mildly in last 24 hours.

Get data from that page: https://oasis.app/25977#Overview

Why is Celsius paying-off debt?

Of course, lowering the liquidation price for their WBTC. I got you! But, this was important when liquidation price was around 20k.
Now it's <3k, and they're still paying off debt. Anyone knows the reason for this?

How is this seen in the light of a potential bankruptcy? You are not allowed to choose, whom you pay off and whom not, when filing for bankruptcy.
It does not make really sense to me.

I think the main thing was to lower the liquidation price, as you said. In a bankruptcy you can't do anything, the bankruptcy administrator take the remaining assets and liquidate them to pay the liabilities, partially, obviously, and how the payments are allocated and in what amounts depends on the regulations that are executed by the bankruptcy administrator.

But I think lowering liquidation price was precisely to avoid banruptcy risk.

instead of being in debt to some class action suit of millions of customers. they have relieved the customer debt(users of locked coin). by replacing it with corporate debt

in short.
a corporation injected them with alot of cash. which they bought up alot of coin.
now they have more coin holdings which they can put up as more collateral behind the scenes to save off any liquidation.

there is ~$440m of coins locked(~21000coins). and G.Sachs just handed them $2b to pull them out of the water of liquidation.
this means they are out of the customer liquidation pond and now in the G.Sach debt lake

Thank you for your explanation. I think you are right, but does this mean Celsius thinks Bitcoin will dip to the 3k area in the near future?

no. its just math..

if they had $114m debt. to customers.
and they now have $2b from G.Sachs
then thats a simple maths X factor that brings position down from $21k threshold down to a lower threshold before liquidating

And where does all this put customers whose funds are locked up? I mean, what's their likely end-game? As soon as they are opening up withdrawals, people will withdraw their funds immediately. Celsius reputation is destroyed and i don't see any viable option to restore it. What is your opinion?

the customer debt has been pretty much made whole again. celsius shouldnt really owe customers anything.
celsius now owes g.sachs

celsius now has enough coins to honour the sidechain locks of customers

..
my opinion.
(i have not gone through all the numbers so treat this as a rough guess, dont query the numbers. query the methodology)

celsius had 21,000 coins locked up to the sidechain(customer locks) but had mismanaged and only had ~15k to allow for withdrawal which caused them problems. of a $114m deficiit(pencil math of 5k coin)

celsius then took on another deal with G.sachs where by G.sachs gave them $2b. which was used to (i guess) buy ~100k coins
celsius can now make customers whole as there are alot of coin now free floating to honour withdrawals. and the remainder is then locked up as new collateral (not the customer stuff) with a escrow with g.sachs who is set a contract for a lower liquidation number should celsius run into trouble and default on g.sachs obligations

.. end goal
.. a waiting game for the g.sachs/celsius partners

waiting for bitcoin price to move up.. lets imagine it went to 2x ($39k)
that 95k coin spare becomes worth $3.7bill so celsius pays off g.sachs $2b+ interest/profit..  and celsius keeps the remainder as free money for celsius.
or
g.sachs stays in partnership and they both share the profits.. or they keep it in coin form and wait for a different higher number

People will keep going there. Now they are trustworthy because they are "paying back". People will keep shilling and new comers will still register and use the shitty platform! And then, shit will hit the fan again. Maybe by that time, a rug pull will be confirmed! People don't learn!

Thanks for your opinion. Truly appreciate it. Hopefully people take it as a lesson bc "Not your keys, not your coins", even if they get lucky this time.

I am hopeful that with every broken shitcoin casino, more and more people will understand the importance of "Not your keys, not your coins."

Maybe this time they are profitable, but in the future people will definitely think about it a second time and don't want to be trapped in things that are detrimental to them, right?
So if some of us can take a good lesson for the future, of course it is a very valuable thing for us together.

Absolutely.

lesson to learn

dont trust sidechain/token collateral especially not for long time hoarding

if it aint the real asset, dont be talked into a pegged asset hoarding pretending its the real asset. as thats just a risk of 'double dipping' ability(depegging, bugs, network issues if not a secure network)

second lesson to learn.. if you are a lil foolish to have things locked on a sidechain, as your hoard token.. then dont have that sidechain token also then locked in a custodian whereby you have no way to move, exchange, sell or withdraw it should a COMPANY "freeze accounts"
as thats a risk of "triple dipping" should the company not play by the rules/customers expectations

EG. if a company is doing funny business. if you have your value as bitcoin on your own private key. it wont matter about the funny business. you can just take your funds elsewhere

EG if a lil foolish to have it on a sidechain. again dont hoard long time in a custodian. have it as a private key of that sidechan.. there may be less companies to choose from but you still have a little bit of choice.

but if its locked in a custodian wrapped in a sidechain your double/triple stuck, left only to pray on their mercy and luck of their business decision

Going to disagree with you a bit here. Since GS is involved I think it's going to be run a bit more like a money hoarding ridiculously high interest & fees business.
Someone @ GS did a bunch of math and made some assumptions and came out with a way to fleece more people. It's now more Celcius has GS as a partner. So you might make less and others might pay more but it's safe. All the while since GS does have funds it all looks more secure.

I don't think there will be a rug pull, just a slow bleed as people see how much this is costing them and they leave and go someplace else. And then they ones that stayed till the end are absorbed into the GSCoin empire.

Just my view.

-Dave

Sounds precisely like how many of were trapped in the [insert Southeast Asian government name]coin empire.

Pensions are a huge ponzi that has been limiting withdrawals to retirees slowly over the past decades. Government bonds keep raising interest so people feel less bad about cash stuck in schemes, and some actually are convinced to buy into longer, deeper locks. But every time it gets to critical point, some other foreign government invests more (think of this as GS) to share the risk, while money printing slaps on more band aids.

No realistic rug pull happening in our lifetimes but everyone bleeds, just a game of who has more blood to let before they pack up and go (literally) or simply live miserably into oblivion or go off grid and return to monke in our vast forests. My remote village has suddenly been seeing more newcomers in past few years when it had actually been in population decline since the 1970s.

Looks like they are preparing for Chapter 11 bankruptcy as they changed their board: https://www.reddit.com/r/CelsiusNetwork/comments/vsmets/update_of_the_whole_celsius_board/

I am not for the U.S. Could anyone explain it to me what it would mean for depositors?

thats not a bankruptcy smell in the air..(it could be, but not always the case)
it could be just changing the management because celsius badly managed the deals prior.
G.Sachs wont trust $2b to the old bad managers.

usually when partnering  with big money (sly version of corporate takeover, hidden as just a financial deal)
managements do change

G.sach's from their fiat regulatory level dont want to appear as having a bad liability company as their subsidiary so on paper its just paper contract of a loan to a private company. but yea reality is the bad managers got replaced by G.sachs trusted guys, while being the puppet master of said company.

that said..
some large companies do buy small companies to strip them of their good assets. and fill the under-company with the larger companies bad assets. and then offload/cut the smaller under-company off as a complete loss.. taking the good companies bad assets with them too.
so maybe a possibility. but too early to tell.

edit to reply to below
(might take longer then a lunchbreak coffee.. wait for your weekend shot of whisky and see what next week brings)

Drink Coffee and see. Thank you Mate.

actually a coffee is maybe all thats needed

done a lil research on the new "manager"
Mr david barse as director

here is his philosophy in his own words
https://tdameritradenetwork.com/video/xout-etf-eliminates-companies-in-secular-decline-and-disrupted

for those that dont click links.. he likes to close down weak link businesses.
so hmm. maybe * it is a smell of bankruptcy coming soon
https://www.davidbarse.com/about-david-barse-ceo

..
*i just found it weird they would pay off their debt. and get a $2b injection, just then to go close the company down due to debt..

hmm.. seems a waiting game is needed as both options are plausible

The main question here is where the heck they get the funds for that loan repayment. There’s a possibility that they are using the balance of the user trapped on there DeFi to extend there liquidation and to attract more customers by building again there trust. I’m still not convinced enough about this news and probably truth will come out on the following days or weeks once crypto slide down further.

I wonder about the strategy of Goldman.

Putting this kind of money in a company with a ruined reputation.

They could just have invested in Bitcoin if they wanted to get more into crypto

Same here. If they file chapter 11, G.Sachs will lose big, right?

G.sachs is not claiming to be a owner of celsius. its claiming to be a loan giver to celsius. however if anyone in business knows G.sachs arranged the management switchover.
the new manager is a known 'liquidator" of weak companies. but even that is not an absolute. some liquidators also know how to recover companies.

as for g.sachs. before filing bankrupcy (via the puppetstrings) if that was the planned route they choose to go, g.sachs will pull out any good assets from celsius. and put in any bad assets g.sachs has. .. and then pull the string

but at this present moment. it can go both ways. a plan to close or grow celsius

Honestly, not many expected it to be like this. During all of this chaos when everyone and everything looks to be going crazy and nobody knows what’s going on. It’s quite good to see them doing at least a bit decent. I have to say the best thing to do right now would be slowing down a bit, and checking what Celcius managed to do. This isn't a simple task neither, it’s a task that has happened very very well and it’s a big deal.

I know that some people who were inside probably knew it, if you are invested into it, you follow it and you would expect it. But, for people who are outside and not really aware of what’s going on inside Celcius, we gotta say it’s a big damn achievement. Certainly, a reason to get a bit of it.

I don't know what are the plans of Celsius' management, but it is a fact that once a brand has lost credibility, it is extremely hard or even impossible to grow it back and it comes with a massive bill which I'm not sure who is willing to bet with.

GS are not fools, if they're getting into a business/partnership they know what they have gotten into and they should have a well-planned strategy.

This will be helpful as far as instilling confidence back into the crypto markets, which should help stabilize things and perhaps even bump up the price.  But for Celcuis it will be a longer climb to make as the trust was broken and this is hard to fully gain back.

Nope. This isn't enough for pumping the cryptocurrency prices and restoring confidence back into the crypto markets. It's not just Celsius. Companies like Three arrows capital and Voyager are having difficulties as well. The companies in the entire crypto indsutry are more or less connected to each other. If one goes down, it causes problems for the others. Those centralized crypto financial services with their high leverage are like house of cards or a domino. If one falls, others will follow. The good thing about this is that more crypto users will learn the meaning of "not your keys, not your coins" and stop trusting centralized services, that offer high rewards for high risk.

We already have a small bump in price going on.  I agree it's more than just one company but you also have the dude from FTX and some other companies that will prop up, shore up some of these companies that got in over their heads, which will also stop some of the crypto market bleeding because they don't want to keep losing- to your point of how connected these companies are.  The whole Luna debacle, unexpected at the time for the most part, set off a chain of unfortunate but somewhat expected events.  Do I personally think this enough for pumping- no, but for quite a few investors it is even if it's false hope so long as it appears as light at the end of the tunnel or a path forward.  I don't represent the typical investor, but it seems to be enough to them for pumping and hence might have a bit to do with what we are seeing in regards to price movement.

When people get hurt too much, their soul is hard to be healed. Not only their soul but also their capital vanishes a lot and it is not easy to recover it to their initial capital when they get in the market.

With this hurt feeling, they won't be ready to touch crypto in near future, if they mostly got rekted in this market. For people who are gamblers, they still gamble again but gamblers don't have ability to control themselves and they won't have happy ending.

DeFi, lending and high APYs, all will be liquidated and bankrupted in bear market. Especially if their portfolios have crytocurrencies that have x100, x200 in 2020 and 2021 bull run and they have yet cashed it out to good stable coins.

Things for them will be worse if they used too high leverage in bull run and did not cut their positions to safer leverage.

I think that this price increase is more like short squeeze than anything else, I don't think that we are out of the woods yet. Regarding Celsius, it is a good news but I think that people who have/had money there are still pretty far away from the moment when they gonna get their money back. If that happens at all.

---

In other news, ex Celsius employee is suing them and accusing of being a ponzi scheme.

Things like this make you wonder if this was all planned from the beginning. Maybe I’m being cynical but cause a capitulation event, crash the price, buy the bottom & laugh at all the normies.

So you think that Celcius Network did all this drama to dump the bitcoin price but this is at the cost of their own reputation. Do you think that even if they pay back the debt, people will still trust them? Will they get the same investments as before? The answer is NO.
No company will do such fake announcements to dump the bitcoin price , as bitcoin will survive but that company will never be able to survive for long term.

Maybe next time a company offers over 10% "risk free" APY to their costumers they should mention the little detail that in order for them to comply with those numbers they will literally gamble all people's money within exchanges, of course using leverage.  ???

Even if they manage to recover from this downside and they get their money back to feed their costumers withdraval orders, the amount of money they will have to give back may end their business or at least minimize their staking value to all time lows. This is a centralized service and all that keeps together a service of this nature is trust and reputation, Celsius has lost both and it is unlikely things will ever be the same for them after this.

The important thing is people getting their money back, of course.

Agree we are not out of the woods yet but perhaps the <$20k days are behind us.  This lawsuit should be interesting, but baring an absolute victory, this will most likely be a death blow.  Even in the case of absolute victory, Celsius may already be mortally wounded now.

Hard to see that this was planned by Celsius intentionally as things are pointing toward greed, over collateralization, and over exposure to luna.  However, you did have entities and savvy buyers that took advantage and bought the dip.

Anything could have happened. If you remember there are so many stories of exchange hacks and most of them are insider hands involved and Celsius / Luna can be no different.

The worst thing is that all of these news come out in the phase when bitcoin is already dumping and is in a bear market. Such news creates more panic and fear.

Because they used customers' money to give loans to high-risk financial institutions, those corps defaulted on their loans, so Celsius has almost no money for its (protected) institutional clients to withdraw as well as for the rest of their users.

if they did do it to 'dump' the market. then they should have been smart and short the opportunity. by buying up more coin at the lower price to give back to investors. and keep the excess win.

but instead, the evidence is that by locking investors out of withdrawals seemed more like they 'spent' the coins outside of their promises thus didnt have the reserves to honour investors deposits. and thus did not short the market. nor had any spare fiat from any coin sells on markets to buy back coins after bad news to make whole again.

requiring a fresh injection of funds from G.sachs shows they lacked coins and lacked fiat. and the questions then become where did all that stuff go in the first place.

Unfortunately those lending places do not realize the default rate because they are taking all the money upfront as a collateral, hence why they are not really lending. It's exchanging with extra steps and nothing more.

If I give you 120 dollars worth of LTC today, and get 100 dollars worth of BTC, then we just made an exchange, sure I could pay you back the 100 dollar worth of btc back, and then get the 120 dollar worth of ltc in my account again, but that's literally trading and nothing more, useless. This is why I doubt that all those "defaults" matter to them, they won't crash down to nothing, why? Because they already took so much upfront.