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Celsius’ user funds remain in the balance as partial debt repaid

Published: 10:42 04 Jul 2022 EDT

Goldman Sachs - Customer funds remain in the balance as Celsius partially repays debt
User funds remain inaccessible on platform

Embattled crypto lending platform Celsius Network paid back another $50mln of its nearly $200m debt tied up in MakerDAO, effectively increasing its collateralisation ratio by 80% as of July 4.

The UK-registered enterprise was at risk of having its position liquidated as Bitcoin (BTC)’s price continued to plummet by 60% in the first two quarters of 2022.

Despite lowering its liquidation price to US$11,865 (the price that BTC needs to fall to for Celsius to default), users’ funds remain trapped in the lending platform.

Adding to the anxiety among stakeholders, its was also reported that Celsius laid off approximately 150 employees as the company fought off insolvency.

Celsius announced its withdrawal freeze in a public memo posted on Monday, June 13 citing “extreme market conditions”.

Other companies followed suit, with Singapore-based lending platform Vauld being the latest to prohibit customers from withdrawing funds after suffering a US$200mln bank run since June 12.

Since then, Celsius at its outspoken founder and chief executive officer Alex Mashinky have been relatively moot on the company’s roadmap out of the quagmire, leading to a conversation rife with rumour and speculation.

In a deleted Tweet, Mike Alfred, co-founder of Digital Assets Data claimed that Mashinksy attempted to flee the US for Israel, although this has been robustly denied.

Despite Mashinsky’s repeated and vocal jabs at the traditional finance sector (“Banks are not your friend” being his personal motto), Celsius appears to be in talks with Goldman Sachs (NYSE:GS) regarding a US$2bln buy up of distressed assets.

Celsius has engaged restructuring consultants Alvarez & Marsal on the matter.

While short traders attempted to capitalise on the struggling CEL token, #celshortsqueeze started trending on Twitter as Celsius community members attempted to resuscitate the value of the token.

As of Monday July 4, CEL was 36% up over the two-day period.

Other large-scale crypto enterprises facing ongoing crises due to the latest crypto bear market include hedge fund Three Arrows Capital, which filed for bankruptcy in early July, and crypto lender Babel Finance, which also froze users’ assets and is currently considering restructuring options.

Proactive Investors learned that Celsius’ London office was vacant when approached for comment.

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