The crypto lending platform Celsius Network has been receiving negative news recently.
According to an analysis by Twitter user yieldchad on June 6, from a technical point of view, Celsius Network may be insolvent. The project has a total of 1 million ETH, but only 268,000 (nearly 27%) have sufficient liquidity; the other 445,000 are Lido’s stETH, which can only be exchanged for 287,000 ETH at the current Curve exchange rate ; The last 288,000 coins were directly pledged into the Ethereum 2.0 contract, and they would not be available for a while (at least within a year). At a rate of 50,000 ETH per week, Celsius will run out of liquid ETH in five weeks.
Although the conclusion is somewhat controversial, Celsius exposes far more problems than that.
When Celsius was plagued by news of “insolvency”, Dirty Bubble Media even revealed that Celsius had lost 35,000 ETH of its customers but had been concealing the fact for a year.
According to Dirty Bubble Media, crypto lending platform Celsius Network lost at least 35,000 ETH in the event of the private key loss of Eth2.0 staking solution company Stakehound.
In a single transaction on February 2, 2021 Celsius sent 35,000 ETH to Stakehound. And hold over 42,000 Stakehound stETH in verified Celsius wallets. At today’s Ethereum prices, the loss is about $71 million. And Celsius never reported the news to customers.
On June 22, 2021, Eth 2.0 staking solution company Stakehound announced that it had lost the private keys of over 38,000 ETH deposited on behalf of clients. The loss was initially discovered on May 2, but the company remained silent and tried to recover the keys. Stakehound blamed hosting provider Fireblocks for the loss and sued the company in an Israeli court. At present, this problem has not been resolved.
Dirty Bubble Media analyzed that Celsius sent more ETH through Stakehound. The currently known Celsius wallets collectively hold at least 42,306 stETH, making them the largest owners of a nearly worthless coin.
Celsius has not been open to its clients over the past year, until yesterday. Celsius chose to conceal such a huge loss, which undoubtedly caused a major blow to its reputation. When a run occurs, Celsius seems to have a hard time dealing with it.
Not only that, but Dirty Bubble Media also claims that Celsius has borrowed at least $76.7 million in USDC and $18.3 million in USDT over the past 30 days to pay for user withdrawals, which is the total amount known to be issued by Celsius hot wallets ($327 million). 29%. “Why does Celsius borrow money to repay customers?” A thought-provoking sentence.
Regarding Celsius, Swan Bitcoin founder Cory Klippsten has repeatedly attacked on Twitter, saying that it is an unregulated hedge fund that holds retail investor funds, but retail investors have no way to monitor or claim. Mike Alfred, CEO of BrightScope & Digital Assets Data, said: “$70,000,000 of customer ETH went to waste and the company involved never told you. How much irresponsible did Celsius Network do with your money? Get out while you can. This thing is going to fall apart. ” Larry Cermak, director of research at The Block, called Celsius one of the most opaque companies he’s seen. Celsius should publicly display deposits, lending and inventory. If you didn’t do that, you wouldn’t trust lending on the platform.
Crypto lending platforms such as BlockFi and Celsius have experienced phenomenal growth since 2020, attracting millions of customers by offering yields ranging from a few percentage points to as high as 17% to individual investors. These platforms take deposits and lend them to institutional investors, returning most of the proceeds to customers. But in a bear market, that might change.
In a bear market, fewer users are using leverage and fewer people are borrowing, and the Celsius business model begins to collapse because they can no longer find the high yields promised to depositors. In addition, Celsius has been investing a large part of its capital into cryptocurrency mining operations, but in the face of policy uncertainty and a crypto bear market, mining operations are in a state of high expenditure, high risk, and low reward. In addition to this, 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, and the latest quotation is $0.68, a 91% drop from the historical high ($8.02 on June 3, 2021).
At present, Celsius has not responded, and we will wait and see how the follow-up develops.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/lending-platform-celsius-conceals-a-loss-of-35000-eth-or-becomes-insolvent/
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