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

TradFi, great savior of Celsius – After a freezing of operations After causing a stir, the lending platform is trying to get out of its delicate situation. Indeed, its bold stances on the digital asset stETH got him into trouble during the crash having influenced the entire crypto ecosystem. Among other steps to get back to the surface, Centigrade has just sought the advice of experts from the banking giant Citigroup.

More than financial support, Citigroup offers strategic expertise to Celsius

The loan protocol then recalled the traditional banking sector to help him out of his bad situation. It is not a question of saving the coffers. Rather, the bank should play an advisory role with respect to the various possible funding avenues.. In this context, Citigroup he wants to help Celsius evaluate all the options that have appeared on the negotiating table. Think, for example, of the competitor Nexo that has officially approached its counterpart. When liquidity problems appeared, he offered to repurchase some of his qualifying assets (mainly his secured loan portfolio).

Citigroup and Celsius are longtime allies. In fact, the bank has already advised Celsius on various businesses and its initial public offering (IPO) projects. The approach was therefore to make public the activity of its bitcoin mining subsidiary. In fact, the protocol still had it recently the intention to do his IPO. A confidential draft S-1 registration for the subsidiary’s IPO was even filed in May. An obligatory step in view of an in-depth examination by the Securities and Exchange Commission (DRY).

The drop in prices has trapped users of the Celsius protocol

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A sequence of events that does not surprise the cryptosphere specialists

For Kaiko, a cryptocurrency research firm, the centigrade drop is multifactorial. A report, released Wednesday, points to a combination of poor risk management, bear market conditions, and overexposure to stETH (staking ether, an ether derivative representing the V2 of ETH tokens). An explosive cocktail that has put the company in a quiet position similar to the tragic history of the bank Lehmann Brothersduring the subprime mortgage crisis.

“Even if he survives this ordeal, I don’t see how anyone can trust people like Celsius to keep their assets safe in the future. “

Conor Ryder, Kaiko’s analyst

Aware of legal turmoil awaiting him, Celsius also hired the firm’s lawyers just before the week Akin Gump Strauss Hauer & Feld LLPa team specialized in renovation debt and insolvency management. An approach that can be a sign of good will or, on the contrary, a strategy of challenge, depending on whether you like to see the glass half full or half empty.

Whatever the outcome of this case, the cryptophiles were experts in this DeFi stamped protocols I will leave for a good lesson. Indeed, the proliferation of setbacks currently affecting some giants of the crypto ecosystem shows that the human factor remains the weak link of blockchain technology. In the future, investors will no doubt be quicker to ask the right questions to truly understand how their return is generated. They may finally become the accountable and invested users who will proactively decide which platforms are trustworthy and which are not.

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