Crypto lender Celsius mulls possible restructuring amid financial woes

[bbc.reporter]

The cryptospace appears to be having a domino effect in insolvency after the collapse of Terra Luna. The rumors are presently saying that much of the liquidity in Defi comes from Celsius and also a big part of it is Justin Sun. I am scratching my head in laughter if this is reality or fud hehehe. In any case, yes Celsius appears to have held UST and deposited them in Anchor to get 20% yields. They might have taken a large loss in that. 3 Arrows Capital and other billion dollar cryptofunds might also have money frozen in Celsius.

However, this is not the big news. There are some who speculate that the Ethereum Foundation has deposited funds in Celsius. There is a transaction hash some have said but I have not seen it. It might only be fud.



Crypto lender Celsius has hired lawyers from Akin Gump Strauss Hauer & Feld LLP as it mulls its financial options after halting withdrawals this past weekend, according to the Wall Street Journal.

Restructuring lawyers have been tapped from the law firm as it mulls what to do after freezing withdrawals, account transfers and swaps. Celsius cited "extreme market conditions" in its announcement at the time.

The Wall Street Journal report said that Celsius "is first looking for possible financing options from investors but is also exploring other strategic alternatives, including a financial restructuring," according to a source with knowledge of the process.

Read in full https://www.theblock.co/linked/152084/crypto-lender-celsius-mulls-possible-restructuring-amid-financial-woes-wsj

[1715472510]

1715472510

[1715472510]

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[mindrust]

to get 20% yields.

20% yields...

Who in the right mind would think that was legit? Anyone with a half brain should be able to see the ponzi scheme behind it. If you can't and "invested" money in any of these ponzi schemes, then you deserved to lose your money. TerraLuna was the first, and it looks like this will be the second domino.

Rising USD interest rates will make the things even worse because more people will want to withdraw their money from these projects and give it to the banks.

[Darker45]

Celsius has to call a spade a spade. What is happening right now is like a bank run. The company isn't just mulling possible restructuring; it is definitely compelled to do some restructuring because it doesn't have a choice. It is falling. It is dying. It is fast losing liquidity. Celsius can't absorb all these big and panic withdrawals. And these revelations--including the withdrawal freeze--although right and good, are not helping. They only make many of their clients more fearful and therefore withdraw, thereby causing more drains from the company.

[mk4]

20% yields...

Who in the right mind would think that was legit? Anyone with a half brain should be able to see the ponzi scheme behind it. If you can't and "invested" money in any of these ponzi schemes, then you deserved to lose your money. TerraLuna was the first, and it looks like this will be the second domino.

Rising USD interest rates will make the things even worse because more people will want to withdraw their money from these projects and give it to the banks.

I really don't believe they're THAT stupid. I farmed the 20% yield on Anchor as well (fully knowing it was unsustainable) but I planned ahead — if UST we're to drop ever so slightly and the Curve AMM pools became unbalanced, I'm immediately going to 100% go out. I'm going to assume that they had the same plan, and that they were just slow.

..or maybe they are stupid.

[bbc.reporter]

@mk4. I am very much in doubt if they were stupid. It might be some of them, however, there were also whales and major cryptofunds that had deposits of UST in Anchor. It is very clear that it was not stupidity that caused their failure. It was greed.

[logfiles]

I really don't believe they're THAT stupid. I farmed the 20% yield on Anchor as well (fully knowing it was unsustainable) but I planned ahead

Isn't this exactly what our hardcore brothers and sisters who still believe in Ponzi schemes do? Get in early knowing it's a risk business that could stop any time and then get out before things go south? 

The rumors are presently saying that much of the liquidity in Defi comes from Celsius and also a big part of it is Justin Sun. I am scratching my head in laughter if this is reality or fud

I will say this again here. Justin Sun is a big fraud and the cracks are starting to appear… It's just a matter of time before people realize.

hehehe. In any case, yes Celsius appears to have held UST and deposited them in Anchor to get 20% yields. They might have taken a large loss in that. 3 Arrows Capital and other billion dollar cryptofunds might also have money frozen in Celsius.

This tweet sums up the Celsius network and the Defi Ponzi schemes

How it started


The current situation so far 

Crypto lender Celsius has hired lawyers from Akin Gump Strauss Hauer & Feld LLP as it mulls its financial options after halting withdrawals this past weekend, according to the Wall Street Journal.

Preparing for a tsunami of lawsuits, perhaps? You can't promise people something, then you do the other thing while blocking their money.

Here we go - Regulators in Five States Target Celsius Over Withdrawal Freeze

[bbc.reporter]

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before. I am not telling everyone that he is the hero, however, he his a survivor. We have lost many characters. Mark Karpeles, Chris Larsen, Dan Larimer, Brad Garlinghouse and other old founders. Justin Sun might survive everything hehehehe. Did you know they presently call him his excellency? He is an ambassador of something now hehe. He might have legal immunity from any type of lawsuits.

In any case, it appears 3 Arrows Capital might have also become insolvent because of Celsius. They were speculated to have $18 billion under their management during the peak of the bull market. There are no news outlets presently reporting on this, however, there are already other founders in social media telling everyone what happened and what their business relationship was with 3 Arrows.



1) What happened between 3AC and us and what we know so far:
@zhusu @KyleLDavies

Source https://mobile.twitter.com/danny8bc/status/1537224378554806272



These are 3 Arrows Capital's investments in the cryptospace. They have many from Avalanche to Blockfi to Axie Infinity.

https://www.threearrowscap.com/select-investments/

[mk4]

Isn't this exactly what our hardcore brothers and sisters who still believe in Ponzi schemes do? Get in early knowing it's a risk business that could stop any time and then get out before things go south?  

There's a huge difference between "still believing in ponzi schemes", versus knowing that it will inevitably implode but that you could still make trades/moves and win in the end. (e.g. farming the yield, then getting out and shorting $LUNA)

[Darker45]

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before.

LOL! But, well, it could happen. But it now depends on whether people in the crypto space would get enlightened or not. Justin Sun is a scheming young man who will remain who he is. He does what he does best. He will continue with his money-making business. He is good in building up hype around his projects. It's just up to the people whether they've learned from history or not. Justin Sun will always prey upon the innocent. But I admit he is better than Do Kwon. CZ must be a good mentor.

[Rikafip]

Who in the right mind would think that was legit? Anyone with a half brain should be able to see the ponzi scheme behind it. If you can't and "invested" money in any of these ponzi schemes, then you deserved to lose your money. TerraLuna was the first, and it looks like this will be the second domino.

Things are not that simple as even smart people do stupid things when greed kicks in and that's what happened here. While Luna has ~20% APY, Celsius was more moderate in that regard (I think BTC had 8-9%) so people automatically assumed that its legit.

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before.

Unless his logarithmic stablecoin USDD ends up the same way UST as for the last four days it has issues staying pegged.

Preparing for a tsunami of lawsuits, perhaps? You can't promise people something, then you do the other thing while blocking their money.

Lawsuits are inevitable at this point. Well known crypto YouTuber/Twitter influencer BiBboy Crypto who allegedly has millions of dollars locked in Celsius already announced that he is preparing the lawsuit and I am sure that many more are planning the same thing. It's just the beginning though as Texas securities regulators have opened investigation and probably other states will do it as well.

The Texas State Securities Board has opened an investigation into troubled crypto lender Celsius, according to reports on Thursday afternoon. Reuters first reported that the regulator has begun investigating Celsius' move to freeze withdrawals and transfers on Monday. Reuters' report states that Texas has labelled its investigation a "priority," and that the regulator is "very concerned" that the freeze may result in "significant financial consequences" for customers.

[stompix]

Things are not that simple as even smart people do stupid things when greed kicks in and that's what happened here. While Luna has ~20% APY, Celsius was more moderate in that regard (I think BTC had 8-9%) so people automatically assumed that its legit.

Celsius model business was solid.
You lend people money in crypto, you make them have 120% collateral, and you charge the ones you lend money to more than you charge people depositing.
Unlike banks you have no fear of people getting unemployed and not being able to pay, but you have no problems with the value of the collateral as you don't issue mortgages that might turn 1/4 of the value, and more important you have a lot of clients with bad credit interested in short loans, clients who would pay 10% of in a month to get the funds needed fast.

In many aspects, the business was solid, more solid than being a loan shark or a bank or a pawn shop, but their problem was they tried to get more and they started using the money that was supposed to cover swings in collateral (as rumors say) to farm yields in different schemes, basically, greed kicked in, and the results, well, suck. I don't have a penny in Celsius but I know guys who had, and I can't blame them, normally you shouldn't have had a problem with it, of course besides the usually hacks and "hacks".

[Rikafip]

Celsius model business was solid.
You lend people money in crypto, you make them have 120% collateral, and you charge the ones you lend money to more than you charge people depositing.

The only problem is that with this business model they probably couldn't sustain that APY, so they had to do bunch of risky stuff which in the end backfired. Here is the good twitter thread that explains what they were doing with people's money  https://twitter.com/jonwu_/status/1536476104986267648

I don't have a penny in Celsius but I know guys who had, and I can't blame them, normally you shouldn't have had a problem with it, of course besides the usually hacks and "hacks".

Yeah same here, I don't have anything in Celsius but I do know few IRL people that did/do have, and they are far from stupid or inexperienced. I was also considering putting something there but in the end I decided to pass as I didn't wanna bother with some smaller amounts like 1-2k USD and I didn't trust them enough to put enough money to get a solid yearly return.

[bitbollo]

I have never invested in any of these websites because their promises are far-fetched.
20% yearly it's a stupid amount because it's 5-10 times much more of what you can get from the traditional bank system.

it is impossible to guarantee these profits without as much risk. it's clear that yes maybe these are good business model but they can't face a negative period or other circumstances as we have seen during these days.

I find it quite curious that these services that "do this for their job" have practically left these economic "big holes" behind them.

[stompix]

The only problem is that with this business model they probably couldn't sustain that APY, so they had to do bunch of risky stuff which in the backfired. Here is the good twitter thread that explains what they were doing with people's money  https://twitter.com/jonwu_/status/1536476104986267648

Yeah, this is where it went wrong!
If they could have been not that greedy they could have lowered their APY to economically feasible models, applying the traditional difference between loans and deposits and they could have made money without any risks. But, in their desire to attract customers they've raised those rates to unsustainable levels, just like the guy in the Twitter link mentioned, they were desperate to attract more money to invest more in their schemes until the volume was again unsustainable, you can't print all this money out of thin air, period!

Anyhow, the funny thing in that tweet:

But even worse than the pseudo-crypto vibe is Celsius' dangerous use of meaningless platitudes and strident anti-bank rhetoric:
- Banking is Broken
- Unbank Yourself
- Replacing Wall Street with Blockchain
- 99% vs. 1%

I always said, the way things are going right now, reminds me of 1898, some enthusiasts who thought they could do things better tried to save the world from one broken system by replacing it with one that will prove to be even worse, but on paper it worked wonders. The same rhetoric, get rid of the 1%, get rid of banks, kill the kulaks, power to the people!!! But in reality, we end up with Terra and Celsius, among many others.

[bbc.reporter]

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before.

LOL! But, well, it could happen. But it now depends on whether people in the crypto space would get enlightened or not. Justin Sun is a scheming young man who will remain who he is. He does what he does best. He will continue with his money-making business. He is good in building up hype around his projects. It's just up to the people whether they've learned from history or not. Justin Sun will always prey upon the innocent. But I admit he is better than Do Kwon. CZ must be a good mentor.

They call him His Excellency hehehe. How did he get to this position which is assumed to have legal immunity? This should be enough to tell everyone that Justin Sun might have a wealthy, powerful backer behind him. Is it CZ? No, I speculate CZ to be just one of the people of an exclusive group created to manipulate and the cryptospace. A crypto illuminati hehehehehe.

[Lucius]

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before. I am not telling everyone that he is the hero, however, he his a survivor.

We can call him by any name, but the fact that people like him have very little (or not at all) scruples and sell their ideas very successfully (however pointless they may be). They all prosper and cooperate in a world where profit is the common denominator, where all boundaries and disagreements disappear. It’s easy to be a survivor when you always have enough money to live like a king, no matter what happens to the projects and companies you have.


As for these crypto-landers, in my opinion, they should never have existed, much less they should have been trusted. Many have said it was a bad idea in the past, and now we know they were right - and I wouldn't care that they fail, but their failure hurts us all. Will people learn anything from all this? I honestly don’t hope too much given the short-term memory that the average cryptocurrency investor shows.

[o_e_l_e_o]

I've lost track of just how many times I have warned people against these kinds of unsustainable returns over the past few years. And as I have also repeatedly pointed out, Celsius' terms of use were explicitly clear that your coins would be effectively gambled for their own profit and that you had absolutely zero protection if something was to go wrong. Now that it has gone wrong, there is essentially nothing users can do but to sit and cross their fingers that they might get some portion of their coins back again, but it seems unlikely.

This should be a very stark wake up call for anyone who is holding coins on any centralized exchange or platform, or locked in any ridiculous yield generators or other such nonsense. Celsius absolutely will not be the last service to go under and take all their users' deposits with them.

[bbc.reporter]

@logfiles. I predict that Justin Sun will come out of this cryptospace game richer and he will be a more important character than before. I am not telling everyone that he is the hero, however, he his a survivor.

We can call him by any name, but the fact that people like him have very little (or not at all) scruples and sell their ideas very successfully (however pointless they may be). They all prosper and cooperate in a world where profit is the common denominator, where all boundaries and disagreements disappear. It’s easy to be a survivor when you always have enough money to live like a king, no matter what happens to the projects and companies you have.


As for these crypto-landers, in my opinion, they should never have existed, much less they should have been trusted. Many have said it was a bad idea in the past, and now we know they were right - and I wouldn't care that they fail, but their failure hurts us all. Will people learn anything from all this? I honestly don’t hope too much given the short-term memory that the average cryptocurrency investor shows.

There always be the rich and powerful everywhere who tries to manipulate and takes advantage everything for profit. This is the reality of capitalism. Whether the name is Justin Sun, Changpeng Zhao, Sam Bankman Fried, Michael Saylor or Elon Musk, everyone like them is out there for profit.

In any case, it is speculated that Zhu Su moved 3 Arrow Capital to Dubai from Singapore to avoid extradition to America for financial crime. This will again be very bad for the image of the cryptospace.

[Lucius]

There always be the rich and powerful everywhere who tries to manipulate and takes advantage everything for profit. This is the reality of capitalism. Whether the name is Justin Sun, Changpeng Zhao, Sam Bankman Fried, Michael Saylor or Elon Musk, everyone like them is out there for profit.

It is not disputed that they are all in the crypto game because their ultimate goal is profit, but the way they will achieve it is important. I would not put Saylor on the same level as Musk, because the former has his own business philosophy and sticks to what he says from the first day he invested in Bitcoin, while the latter did a lot of damage with his tweets by pumping that altcoin, and even greater damage is made by his decision to withdraw Bitcoin as a payment option in one of his companies.

In any case, it is speculated that Zhu Su moved 3 Arrow Capital to Dubai from Singapore to avoid extradition to America for financial crime. This will again be very bad for the image of the cryptospace.

I read an article in which the SEC investigates Kwon, but they already admit that it will be difficult for them to prove that he intended to do something bad - even though he was extracting large amounts of money months before the collapse. I think that in this particular case it would be difficult to prove something, but if you have money and you are not completely stupid, you can at least temporarily evade justice.

[uneng]

Who in the right mind would think that was legit? Anyone with a half brain should be able to see the ponzi scheme behind it. If you can't and "invested" money in any of these ponzi schemes, then you deserved to lose your money. TerraLuna was the first, and it looks like this will be the second domino.

Things are not that simple as even smart people do stupid things when greed kicks in and that's what happened here. While Luna has ~20% APY, Celsius was more moderate in that regard (I think BTC had 8-9%) so people automatically assumed that its legit.

Over bitcoin, Celsius was paying up to 8,53% annually (if receiving rewards in CEL token) or up to 6,50% (if receiving "in-kind" rewards). Moreover, rates could change from week to week, depending the market conditions and demands. The more borrowing demand there was for a currency, more interest they would pay to investors on that week. So the system was dynamic and constantly changing, what I consider really good for the sustainability of the platform. And yes, theoretically it could be legit, because the lending business is a profitable one.

The problem is what they have been doing on the backgrounds and don't share with the community they are constantly saying to be acting in the interest of as their main priority...

I'm one of the 1,7 million investors of the platform who injected over 5 billion dollars on their hands. Things aren't looking good, because there isn't transparency, the CEO has disappeared from social medias, all messages coming from them are evasive and say nothing enlightening, sock puppets accounts on twitter and reddit keep pushing an "us against them" narrative to protect Celsius, just like Mashinsky has always done and inexplicably CEL's price is doing well right now, pumping decently, what indicates the platform is burning investors' funds to boost their native token.

Anyway, they can't pull the rug without consequences. It's not an anonymous virtual investment scheme and there are too many people and too much money involved on it.