The company called Celsius has started to be mentioned as the reason for the decline in the crypto money markets. So, how could this company, which borrows and provides loans and interest with crypto money, turned the market into a bloodbath? Here’s the behind the scenes…
Cryptocurrency markets have been making its investors vomit blood for the last two days. such that bitcoinwhich is one of the strongest support levels in recent periods. Even the $29k band went below. Bitcoin, which has regressed to $ 21 thousand in the last 24 hours, as of the time of writing this article. 22 thousand 400 dollars watching levels. The situation in altcoins is worse than Bitcoin. So what happened to the markets? What is behind this decline?
In fact, the cryptocurrency markets were walking on a very thin tightrope. Happened about 1 month ago Terra (LUNA) eventto the markets damaged trust, even the dollar-indexed altcoins (always around $1) were viewed with suspicion. Some people believe that the main reason for yesterday’s decline is Celsius believes it is. So what is this Celsius thing?
Celsius was giving loans on cryptocurrencies, providing interest income
Celsius, one of the names in the industry for a long time, with its simplest explanation. loan and interest income establishment. The company promised certain rates of return to crypto money investors and took the investor’s money. The money in the pool was also loaned to others as a loan. a standard bank The company, which adapted its working principle to crypto money, was therefore occasionally confronted with the competent authorities.
Celsius managed to become one of the companies that attracted the attention of investors. The company, which performed very well in 2020 and 2021, has as of the end of last year. $10 billion valuation reached. So how did these guys make money? Actually, the system was very simple. The profit rates given to the investor were kept at a reasonable level, and the profit on the rise was directly transferred to the company. Moreover interest-bearing loan.
“Terra (LUNA) collapse creates a domino effect for Celsius”
The first incident that allegedly put a stone to the work of Celsius was the Terra (LUNA) scandal. After all, the company was obliged to give stakes to its participants, but the collapse of Terra (LUNA)’s stablecoin UST, Let Celsius hurt had caused. It is claimed that the damage here could be around 500 million dollars. But that’s not the whole problem. Investor trying to escape when markets are falling he wanted to withdraw his money. And that puts things in an even bigger stalemate for Celsius. Because while the company kept some of the deposits in locked Ethereum pools, the cash shortage has reached the level it has never been.
Company assets are almost entirely owned by customers
Jack Niewold, who made the allegations that we have conveyed so far, also spoke about the assets of the company in his post on Twitter. Allegedly, $10 billion of Celsius’ money customer-owned. The size of the company’s own money is only $ 1.5 billion, and this money is kept in various crypto money wallets. well scissors between It’s open at an unprecedented level, and it’s hard to get out of here.
Withdrawals suspended!
Celsius is aware of the problem. As a result, the investor resentful took a decision. As part of this decision, all withdrawals and transfers on the platform were suspended. The company cited ‘extraordinary market conditions’ as the reason it stopped trading, but the main reason was that it wanted to withdraw money. able to pay the investor absence is showing.
What happens next?
Celsius has several options in front of it. One of them is to be able to give the money to be withdrawn to the customer. For this too providing cash needs. Celsius can pay out of its own budget, if any, or bail out its customer by borrowing huge amounts. However, if these cannot be done, the main problem arises. Company, may come to the point of bankruptcy or even declare bankruptcy. If this possibility materializes, the shattered trust in the cryptocurrency community could easily be can’t recover we can say. Because there is 10 billion dollars in money…