Celsius started to freeze withdrawals, exchanges and transfers frozen. The funds got migrated to the FTX exchange.
Celsius, a bitcoin (BTC) and digital assets lending and investment entity, is currently in the middle of a problematic situation after freezing withdrawals from its platform. After the statement’s release, one of its wallets migrated at least USD 320 million in ether (ETH) and wBTC (bitcoin token in Ethereum) without further explanation.
An address verified as owned by Celsius registered constant movements since the early hours of this June 13. There are withdrawals for more than 6,000 wBTC and 50,000 ETH.
Many withdrawals came from funds that Celsius housed on the decentralized lending platform called Aave as part of its collateral currencies, which got sent to the FTX exchange.
The chronology of the event highlight that the withdrawals took effect minutes after the withdrawal freeze became official on the network. The statement got also revealed on Twitter, while the first withdrawal operation executed by WBTC took effect at 6:46 PM UTC, as the Etherscan portal highlighted. After this situation, there have been another six operations in which more than USD 320 million in cryptocurrencies got moved.
The company did not highlight any official reason for the migration of these funds. The entity just had withdrawn its collateral on Aave and revealed that it intends to keep liquidity afloat on the network during the withdrawal freeze.
The moves to FTX could intend to request a collateralized loan to support its liquidity. Also, the movement’s goal would be to sell the cryptocurrencies housed by Celsius, but there is no official explanation.
Celsius can Cause its own Perdition
Celsius could fall into default due to the little liquidity it currently possesses. Although it was a possible future panorama, the current situation seems to make it a reality, with the blocking of withdrawals and the unexpected migration of its reserves.
The stETH token theoretically should keep 1:1 parity with ETH, but it is also subject to its own variations determined by supply and demand.
Celsius determined that at least 50% of its ETH reserves were in stETH (more than 400 thousand stETH). In a liquidity emergency, with massive withdrawals, Celsius will have to give its stETH positions which would cause the token to lose its parity.
The token would lose its parity in such a way that the procedure currently applied by Celsius to stop withdrawals may get caused by the protection of its reserve capital in this type of asset.
By: Jenson Nuñez
