The depth of detail of events that began with Celcius (actually, they began with the collapse of Luna and Celcius is the next chapter in the story) is so broad and deep that I think I will have to outline everything in a Medium piece. So be it. I’ll do a TL;DR instead.
TL;DR
Celcius is a platform that has been around since 2015 that allowed people to deposit their crypto and earn yields (a lot like a traditional bank,) and also borrow crypto (which was charged interest, similar to how traditional banks loan money.) The problem was, that in order to be competitive with other platforms (as well as smart-contract driven decentralized platforms and liquidity pools,) they had to derive income from defi protocols and liquidity pools. When prices fell, it turned out they lacked the liquidity to to maintain their positions. As a result, they had to freeze all withdrawals to maintain what asset base they had. As of this writing, withdrawals are still locked and the platform has retained legal guidance for how to either restructure or cover their positions.
Here are a couple videos that give you a good cross-section of what happened:
Coin Bureau – Crypto News Update
Arca – That’s Our Two Satoshis
In the midst of all this, we come to discover that a gigantic investment fund, Three Arrows Capital, is experiencing a liquidity crisis stemming from dropping token prices and from platforms like Celcius in crisis.
In short, we’re seeing a cascade effect happening in front of our eyes, and more platforms, companies, and possibly protocols will buckle under.
And you can be 100% certain that this will add fuel to rhetoric and the eventual regulations and laws around disclosure and compliance for these platforms.
As a side note, it wasn’t until someone uncovered it that we learned that Celcius was starting up a bitcoin mining operation.
More to come, please read through the tweets below to learn more. They are very detailed and give good picture of how bad the situation is.
Celsius Hires Restructuring Attorneys, Looking for Financing Options: Report
Nexo Proposes Buyout of Celsius Assets as Crypto Lending Rival Halts Withdrawals
Celsius Calls on Citigroup for Options After Liquidity Squeeze, Report Says
Crypto lender Babel Finance halts withdrawals due to liquidity pressures
Maker cuts off Aave’s Dai supply as fallout from Celsius continues
Three Arrows Capital has failed to meet margin calls: Report
Three Arrows-backed Protocol Says Major Chunk of Treasury Is Unaccounted For
Hindsight 20/20: The ‘Missed’ Signs Of The Celsius Insolvency
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Be well, Everyone.
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