Hoboken, New Jersey-based Celsius Network LLC is one of the largest crypto-lending firms in the world, holding over $11 billion worth of assets according to the company.
Troubles seem to have started at Celsius when Bitcoin fell below $30,000 and the entire market saw drawdowns. Jacob Silverman, a journalist, commented on Twitter that in a short period of time Celsius assets under management are down by $5 billion:
“Things sound bad at crypto bank/lender Celsius. AUM down $5 billion in less than two weeks. Customers revolting. The CEO is cashing out and yelling at people in AMAs. Insane yields were always unsustainable.”
The CEL token is down 3.69% in the last 24 hours, trading at $0.799, it has also lost more than 20% over the past week and a painful 63% over a two-week period.
Despite the company raising $400 million in a funding round in October 2021, users reported that the trading was illiquid as the token price started falling, which further increased investors’ losses. This exchange between investors and the CEO of the company took place over Twitter Spaces, an online space where unfiltered conversations can take place.
Celsius recently announced that its Bitcoin mining subsidiary might be going live as the company filed confidentially with the SEC on May 16. This side business could be used to prop up liquidity in the lending part of the business and increase profitability in general.
It seems as if the high yields promised, look too good to be true as the situation around Celsius unravels and more red flags come to the fore.
Celsius a new ‘crypto bank’
Meanwhile, Celsius is one of the new cohorts of ‘crypto banks’, which holds crypto assets and pays investors high yields on their holdings.
The company also lets investors loan either fiat or crypto at high-interest rates, which can be in turn repaid via fiat or crypto. The ‘crypto bank’ uses its own native token called CEL to facilitate transactions and improve returns to investors.
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