Celsius Network Liquidity Problems – Bankruptcy Coming?

Is Celsius going bankrupt? In this article, you will find a complete review of the recent events regarding the Celsius network, and what to expect in the coming weeks.

In the current bearish cycle we are seeing more and more projects take a hit, especially in the DeFi space, especially with platforms like Terra. Now Celsius, the biggest lending platform in the world, is also struggling. 

So, what happened?

On June 13, 2022 the platform paused all the withdrawals, swaps and transfers between accounts ‘due to extreme market conditions’. The full Memo is available here. 

Following these events, the $CEL token collapsed from levels around $0.475 to $0.09 in a zip. After the recovery, the asset was trading near $0.18. (Note, the price at the moment of writing is $0.335). 

The long-term issue that Celsius is trying to resolve is not being able to meet the obligations and outstanding debt. 

The article by CNBC highlights the key factor of such a crash – the firm had more than $8 billion lent out to clients and almost $12 billion in assets under management as of May. Luna possibly was part of this debt portfolio, creating a lot of uncertainty and devaluation. 

Of course, it is also related to the downward spiral of BTC and ETH. 

The DeFi summer of the last year was basically when basically most of the money was pushed into defi protocols, and is now showing what potential problems with these models could be. It is definitely something to consider – that every protocol that yields higher than average comes with higher than average risk.