Last updated on November 17th, 2022 at 01:39 pm
The troubled cryptocurrency lending company, Celsius, has paid off its final significant debt. Data from Etherscan shows that Celsius returned $50 million to decentralized finance (DeFi) lending platform Compound in the form of DAI, MakerDAO’s stablecoin tied to the dollar. As payment for the loan’s collateral, Celsius got about $200 million in wrapped Bitcoin or WBTC.
The loan was over-collateralized, which implies that Celsius provided Compound digital assets above the loan amount at the outset to help offset any losses. At the time of writing, the 10,000 WBTC sent back to Celsius was valued at around $198 million.
The payment represents Celsius’s final significant debt repayment to decentralized financing lenders. The business acquired $440 million in collateral last month after repaying a loan to DeFi protocol, Maker. Just recently, Celsius made a similar $415 million profit after significantly reducing its debt to Aave.
For Celsius, recovering such a large amount of collateral is no easy task. On various occasions in May and June, when the value of cryptocurrencies was at risk of falling below 150% of the value of the loans they were supposed to cover, the company came perilously close to losing these deposits to collateral liquidation.
It’s still not clear if this infusion of more than $1 billion in recovered debt collateral and any other cash the company may have will be enough to meet Celsius’s customer obligations.
A little more than a month ago, the lending site, which provided users with high-yield loans with interest rates as high as 18% on cryptocurrency deposits, halted all customer withdrawals, swaps, and transfers due to liquidity problems. They have not been unfrozen.
After markets started to collapse in early May, the company was one of the first crypto-lending companies to freeze accounts. Since then, several platforms, including CoinFLEX, Babel Finance, and Voyager, have done the same.
Celsius CEO Alex Mashinsky has been silent on Twitter since last month since he published a blog post from the company announcing that the Celsius team was working as swiftly as they could to stabilize liquidity and operations. No timeframe for when customer accounts might be unfrozen was provided in the post.
According to a report published on July 10th, the firm has replaced the attorneys it had only recently hired to oversee the reorganization of the business. Just recently, the financial watchdog for Vermont declared Celsius to be seriously insolvent and asserted that earlier claims made concerning the security of client funds by Mashinsky and other firm employees were false. At the moment, regulators in Vermont and at least five other states are investigating why Celsius froze its clients’ accounts.
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