Earlier today, the Celsius network halted all withdrawals, swaps and transfers between its users’ accounts, citing extreme market conditions. Now, rival crypto lending firm Nexo is extending a letter of intent to buy all the company’s eligible assets.
Trouble in paradise
One of the leading cryptocurrency lenders – Celsius Network – is facing major problems. Citing “extreme market conditions”, the company halted all withdrawals, swaps and transfers between its users’ accounts, causing a stir within the crypto community. Shortly thereafter, a rival company – Nexo – sent a letter of intent to “purchase residual qualifying assets” from Celsius Network.
Nexo, its partners and affiliates could easily acquire some or all of the eligible outstanding loan receivables secured by their corresponding pledged cryptocurrency collateral, subject to Nexo’s risk management and collateral requirements.
Celsius has paused customer recordings
CEL token tanks 70 percent in just 1 hour after the platform stops recording: “All Nexo products work normally – borrow, earn, trade, the Nexo card,” reads Nexo’s tweet.
The comment section was saturated with users tagging the Celsius network and asking them to learn something from Nexo. Some users took the opportunity to ask Nexo about terms and conditions and wondered if they could freeze funds like Celsius.
Help was denied
Nexo took it to Twitter to confirm the news: Following what appears to be the insolvency of Celsius Network and considering the ramifications for their retail investors and the crypto community, Nexo has extended a formal offer to acquire Celsius Network qualifying assets following their withdrawal freeze.
Nexo informs customers that all their deposits and withdrawals are processed immediately. “All Nexo products work normally,” says the Nexo team.
The platform also claims that it tried to help Celsius, but their help was denied. Crypto platform Nexo has informed its clients that all their deposits and withdrawals are processed immediately. This release follows Celsius’s controversial announcement that it has paused withdrawals and transfers between accounts due to “extreme market conditions.”
Assets exceeding liabilities
Nexo further stated in the post that it is the first and only blockchain finance company to conduct a real-time audit of its depositories, showing that the company’s assets exceed its liabilities at all times.
The team claimed it has never applauded the failure of a blockchain company, but has warned that adopting a sustainable business model based on sensible risk management sets Nexo apart and allows them to maintain financial stability.
“As a sign of goodwill and in an effort to support the digital asset ecosystem during these difficult times, we reached out to the Celsius team yesterday to offer our support, but our assistance was denied,” read one of the tweets in the thread. “We firmly believe that much can be done to help Celsius customers.”
Nexo also added that it is in a solid liquidity and equity position to easily acquire residual Celsius eligible assets. “We are preparing an offer to Celsius for that deal and will communicate it publicly.”
Impact on Ethereum
Over the course of the last three days, Celsius transferred roughly 104,000 ETH to FTX, with 50,000 ETH being moved today, 12,000 ETH yesterday, and 42,000 ETH on Saturday. Celsius also transferred about 9,500 WBTC to FTX today.
This Celsius debacle is coming at the worst possible time for ETH investors, as well as crypto in general. The fear is extreme, given that we are so fresh from the Luna death spiral, not to mention the abhorrent macro climate as the stock market is tanking off the back of inflation and rate hike probabilities increasing. ETH is a highly volatile asset at the best of times, and is getting caught up in all this carnage as investors scamper to protect their assets and the liquidity and prices collapse. In crises correlations go to one and there is a flight to quality – that’s exactly what we are seeing now as ETH nosedives down towards $1K.
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