Crypto Lender ‘Celsius’ Pauses Withdrawals, ‘Nexo’ Proposes Buying It Out
Categories: Crypto News US
Celsius Halts Withdrawals, Nexo Offers to Rescue In its now infamous June 13 blog post, Celsius said it would pause its swap and transfer products, without offering any timeline as to when withdrawals would be resumed.To be sure, Celsius is a controversial business that has made news for all the wrong reasons. Last year, its CFO was arrested on charges of money laundering, and then in April the company halted interest accounts for retail investors without due notice.In a now widely circulated letter addressed to Celsius, Nexo has suggested that it is specifically interested in the former’s collateralised loan portfolio, however no mention of price was made: As per the letter, Celsius has until June 20 to respond, however unconfirmed reports have circulated online that Nexo’s advances have been rejected.For now it appears as if users will need to sit on the sideline hoping that all turns out well. However, with the price of digital assets collapsing, the situation is likely to get even worse for some users, according to Casa CEO Nick Neuman.In a fascinating breakdown of the mechanics behind Celsius, Bitcoiner Dylan LeClair outlines how the company has earned a yield on its products. In short, it used user funds to arbitrage inefficiencies in the crypto market, and over time, found itself employing increasingly risky strategies to maintain artificially high yields. Celsius Exposed to Attack Celsius is now in a transparently precarious position, which unfortunately means it is susceptible to attack. It has since defended its reserves, though its current liquidation level is available for all to see here.Arguably the most egregious part of this saga is that Celsius is using user funds to defend its risky yield strategies. You’d imagine that few users were fully informed of the risks upfront. It’s become trite, but now more than ever – “not your keys, not your coins”.