Celsius in red: Citigroup bank to the rescue of the crypto giant

TradFi, the great savior of Celsius – After one freezing of operations After creating uproar, the lending platform seeks to get out of its difficult situation. In fact, its bold positions on the digital asset stETH got him in trouble during the crash has affected the entire crypto ecosystem. Among other steps to get back above water, Celsius has just sought expert advice from the banking giant Citigroup.

More than financial support, Citigroup brings strategic expertise to Celsius

The Lending Protocol therefore called for traditional banking sector to help him get out of his bad patch. This is not a matter of saving the box. Rather, the bank should play an advisory role with regard to the various possible sources of financing.. In this context, Citigroup wants to help Celsius assess all the options that have emerged on the negotiating table. We are thinking, for example, of the competitor Nexo, which has officially approached its counterpart. When liquidity problems arose, he offered to buy back some of his qualifying assets (mainly his portfolio of secured loans).

Citigroup and Celsius are perennial ally. In fact, the bank would have already advised Celsius on various activities and on its IPO projects. The procedure was then to publish the activity in its bitcoin-mine subsidiary. It still had the protocol recently the intention to do his IPO. In May, a confidential draft of the S-1 listing for the subsidiary’s IPO was even filed. A mandatory step in the light of an in-depth study of Securities and Exchange Commission (DRY).

The price drop has caught users of the Celsius protocol

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A course of events that does not surprise specialists in the crypto-sphere

For Kaiko, a crypto research firm, is celsius fald is multifactorial. A report released on Wednesday points to a combination of poor risk management, bearish market conditions and overexposure to stETH (staked ether, an ether derivative representing V2 of ETH tokens). An explosive cocktail that put the company in quite a position similar to the tragic history of the bank The Lehmann brothersduring the subprime crisis.

“Even if it survives this ordeal, I do not see how anyone can trust people like Celsius to keep their assets safe in the future.”

Conor Ryder, analyst at Kaiko

Pay attention to legal unrest who is waiting for him, Celsius also hired, a little earlier in the week, the firm’s lawyers Akin Gump Strauss Hauer & Field LLPa team specializing in restructuring debt and insolvency management. An approach that can be a sign of goodwill or, on the contrary, a defiant strategy, depending on whether you like to see the glass half full or half empty.

Whatever the outcome of this case, cryptophiles are adept at these DeFi stamped protocols will leave for a good lesson. In fact, the prevalence of setbacks currently affecting some giants of the crypto ecosystem shows that human factor remain weak joint of blockchain technology. In the future, investors will no doubt be quicker to ask the right questions to really understand how the returns paid to them are generated. They may well finally become the responsible and invested users who will proactively decide which platforms are credible and which are not.

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