Celsius claimed to have $28.6 billion in assets under management at the end of 2021. This weekend, it suspended withdrawals indefinitely to avoid possible insolvency. Now, it claims to own just 151,534 bitcoin ($3.3 billion) worth of assets — an 88% reduction.
The company pays customers ultra-high interest rates for depositing various crypto assets. It’s still advertising 9.32% APY on ‘stablecoins’ like USDT, USDC, BUSD, and GUSD. Rates for other assets reach as high as 18.63% APY.
It should be noted that so-called ‘stablecoins’ are not necessarily stable. The collapse of Terra LUNA’s $1 ‘stablecoin’ to less than one cent has taught the world this lesson.
Nearly every $1-pegged coin has lost its peg at some point, including the top ‘stablecoin’ Tether, which has traded as low as $0.001 and as high as $1,000. Some, like TerraUST, never recover.
Celsius paid even higher rates to customers who agreed to receive payments in its proprietary token, CEL. The price of CEL is down 94% year-to-date.
Many crypto traders are vying to liquidate Celsius’ bitcoin. As of late Monday night, the company had an outstanding loan balance from decentralized finance lender Aave of 23,962 wrapped bitcoin with a liquidation price of $16,852 per bitcoin.
$16,852 bitcoin could happen. Bitcoin is already down 68% from its all-time high. On Monday night, bitcoin traded as low as $20,816 ⏤ within 19% of Celsius’ liquidation price.
One of Celsius’ direct competitors, Nexo, has already offered to discuss a distressed asset sale.
Celsius’ many run-ins with regulators
The company has a tempestuous history with law enforcement. With its collapse this week, its run-ins with regulators are probably far from over.
- Tether is a major Celsius shareholder.
- Celsius once had $500 million in Terra LUNA’s disastrous Anchor protocol.
- Israeli authorities arrested its chief financial officer Yaron Shalem last year regarding his involvement with crypto mogul Moshe Hogeg.
- Last year, the New Jersey Bureau of Securities served the company a cease and desist order.
- In September 2021, state regulators in Texas, New Jersey, and Alabama ordered the company to explain how its Earn Rewards did not violate securities laws.
- Celsius once lost $54 million by using consumer-grade, single-signature software, Metamask.