Celsius network, an encrypted lending platform, has been getting negative news recently.
According to the analysis of yieldchad, a twitter user, on June 6, from a technical perspective, the Celsius network may be insolvent. There are 1million eth in the project, but only 268000 (nearly 27%) of them have sufficient liquidity; The other 445000 are Lido’s eth, and only 287000 eth can be exchanged at the current curve exchange rate; In the end, 288000 pieces were directly pledged into Ethereum 2.0 contract, which will not be available for a while and a half (at least one year). At the rate of 50000 eth per week, Celsius will run out of liquid eth in five weeks.
JoHtUQycjDfQX5v5cm52xGqmTt7Y9M33LGE04GUT. Png although this conclusion is controversial, the problems exposed by Celsius are far more than this.
When Celsius was caught up in the news that it was “insolvent”, dirty bubble media revealed that Celsius had lost 35000 eth customers, but had been concealing the fact for a year.
According to dirty bubble media, Celsius network, an encrypted lending platform, lost at least 35000 eth in the event that the private key of eth2.0 pledge solution company was lost.
In a single transaction on February 2, 2021, Celsius sent 35000 eth to stakehound. More than 42000 stakehound Seths are held in the verified Celsius wallet. At today’s Ethereum prices, the loss was about $71million. Celsius never reported this information to customers.
On June 22, 2021, stacehound, an eth2.0 pledge solution company, announced that it had lost the private keys of more than 38000 eth deposited on behalf of customers. The loss was initially discovered on May 2, but the company remained silent and tried to retrieve the secret key. Stakehound blamed the loss on the hosting provider fireblocks and sued the company in an Israeli court. At present, this problem has not been solved.
According to the analysis of dirty bubble media, Celsius sent more eth through stakehound. The currently known Celsius wallets hold a total of at least 42306 Seths, making them the largest owners of almost worthless tokens.
In the past year, Celsius did not admit this to its customers until yesterday. Celsius chose to conceal such a huge loss, which undoubtedly caused a major blow to its reputation. In the event of a run, it seems difficult for Celsius to deal with it.
Moreover, dirty bubble media also said that in the past 30 days, Celsius has borrowed at least usd76.7 million and usd18.3 million to pay user withdrawals, which is 29% of the total amount issued by the known Celsius hot wallet (usd327million). “Why did Celsius borrow money to repay customers?” One sentence is thought-provoking.
Cory klippsten, founder of Swan bitcoin, has repeatedly attacked Celsius on twitter, saying that it is an unregulated hedge fund and holds retail funds, but retail investors have no way to supervise or claim. Michael Alfred, CEO of brightscope & digital assets data, said: “the $70000000 customer eth has gone down the drain, but the company involved has never told you. How many irresponsible things has Celsius network done with your money? Go out when you can. It’s going to collapse.” Larry cermak, research director of the block, said that Celsius was one of the most opaque companies he had ever seen. Celsius should publicly display deposits, loans and inventories. If you don’t do this, you won’t trust the lending on the platform.
Since 2020, cryptocurrency lending platforms such as blockfi and Celsius have experienced amazing growth, attracting millions of customers by providing individual investors with yields ranging from a few percentage points to as high as 17%. These platforms absorb deposits, lend them to institutional investors and return most of the proceeds to customers. But in a bear market, that may change.
In the bear market, fewer and fewer users use leverage and fewer people borrow. The business model of Celsius began to collapse because they could no longer find the high yield promised to depositors. In addition, Celsius has been investing a large part of its funds in cryptocurrency mining business, but under the uncertain policy and cryptocurrency bear market, the mining business is in a state of high expenditure, high risk and low return. In addition, Celsius will also face competition from legitimate platforms such as blockfi.
According to coinmarketcap data, Celsius (CEL) has fallen by more than 12% in the last 24 hours. The latest quotation is US $0.68, down 91% from the historical high (US $8.02 on June 3, 2021).
At present, Celsius has not responded. Let’s wait and see what happens in the future