Users threaten million terra collapse sue

Celsius Network pays users up to 30% interest weekly. But the recent liquidity crisis faced by the network has diminished the potential returns for users.

The network has confirmed that users will continue to receive interest during the period of pause.

Why Celsius could collapse like Terraform Labs’ LUNA and UST

Crypto lender Celsius Network could follow Terraform Labs’ sister tokens LUNA and UST and collapse after recent announcements of paused withdrawals.

The Celsius Network’s CEL price plummeted nearly 40% in response to the announcement. The crypto community identified red flags in Celsius Network’s main DeFi wallet, transactions that the project is yet to explain to its users.

Celsius Networks’ two key moves that remain unexplained:

  • Celsius exited its DeFi positions (WBTC staked on AAVE) and replaced it with stablecoins like USDC.

  • Neuwim. “USA inflation is currently 6.8% and is highest since 1982. Almost 55% of all ever existing dollars were printed in last 3 years.
    Can we finally stop pretending fiat is in any way safer than crypto?”, r/CryptoCurrency. Reddit. December 12, 2021. ↩︎

  • Lorion, Matt.
    Now you know the truth…”. (TikTok video). April 3, 2022. ↩︎ ↩︎2

  • Robles, Angelo. “Michael Saylor on Economics, Bitcoin and Decision Making”, The Angelo Robles Podcast. (YouTube video). March 10, 2021. ↩︎

  • Tweet by FatManTerra.

    May 19, 2022. ↩︎

  • Brown, Eliot and Chang, Julie. “Celsius Said It Was Low Risk; Documents Show the Opposite, The Wall Street Journal. June 30, 2022. ↩︎

  • “Bitcoin price chart”.

    CoinDesk. ↩︎

  • “TerraUSD (UST) stablecoin dramatically loses its peg”, Web3 is Going Just Great.

  • And along came the familiar refrain from others in the crypto community: “They should have followed the number one rule in crypto: don’t invest what you cant afford to lose.”

    In 2021, 49% of Americans characterized their level of debt as unmanageable. 37% worried about their ability to meet a $100 emergency expense, and 43% worried about a $500 emergency. One in three did not have enough money to pay their bills in full and on time.21 Increasing numbers of people are working multiple jobs.22 Those in the millenial generation have “almost no chance” of being able to afford a house.23 Looking beyond the boundaries of the U.S., people face dire financial straits for these reasons and many more.

    It is undeniable that there are people who make risky financial decisions based on greed.

    However, enormous numbers of people are financially desperate.

    Users threaten million terra collapse suer

    They Made Millions on Luna, Solana and Polygon: Crypto’s Boom Beyond Bitcoin”, The New York Times. February 7, 2022. ↩︎

  • Kato, Brooke. “Young investors are abandoning stocks for crypto — and making millions”, The New York Post.

    June 30, 2021. ↩︎

  • Locke, Taylor. “‘I had $10 in my bank account’: This 36-year-old went from living paycheck to paycheck to making over $109,000 selling NFTs”, CNBC. February 2, 2022. ↩︎

  • Lee, Spike. “The Currency of Currency”.

    (YouTube video). July 14, 2021. ↩︎

  • Tweet by Binance. August 30, 2020. ↩︎

  • the_far_yard. “Crypto is enabling everyone to do what billionaires are able to do at a smaller scale. Crypto is more than just a ‘legal tender’, it’s an appreciating asset. I’ll explain the basis of this economics briefly.”, r/CryptoCurrency. Reddit. December 17, 2021.

  • Celsius Network sent $320 million in Ethereum to the FTX exchange.
  • Experts and crypto analysts argue that Celsius Network is working hard to tackle the current liquidity crisis facing the project. The argument is that if Celsius fails, the project could sell a

    significant stack of staked ETH (stETH provided by Lido DeFi lending platform), which would cause the token to depeg further from ETH.

    $247 million in WBTC was sent to FTX exchange

    On June 4, 2022, Celsius Network held $3.8 billion in assets across multiple DeFi protocols and wallets, and $1.18 billion in debt from AAVE, Compound and Maker. The project drained previously identified DeFi positions to fund their main DeFi wallet.

  • Celsius Network token plunged nearly 40% overnight after the project locked away over $12 billion in crypto assets.
  • Due to extreme market conditions, Celsius has paused all withdrawals, swaps, and transfers between accounts.
  • Experts note that Celsius Network has consistently withdrawn from its DeFi positions to stake stablecoins and recover from the liquidity crisis.
  • Celsius, a leading crypto lending platform, is suffering a liquidity crisis as the crypto market continues to plummet. The project has unstacked $247 million worth of Wrapped Bitcoin from AAVE and sent it to the FTX exchange. The consistent withdrawals from DeFi positions and restaking on protocols has raised red flags in the crypto community.

  • Users threaten to sue after yield generation project Stablegains loses $44 million in Terra collapse”, Web3 is Going Just Great. ↩︎

  • “Celsius files for bankruptcy”, Web3 is Going Just Great. ↩︎

  • Entries with the “Collapse” theme, Web3 is Going Just Great. ↩︎

  • zachgold1616. “How much crypto / usd did you have on Voyager? I’ll go first, 3 btc…”, r/Invest_Voyager. Reddit. July 6, 2022. ↩︎

  • Cat-Evening.

    “I lost over 450k usd, I cannot pay the bank. I will lose my home soon. I’ll become homeless. suicide is the only way out for me”, r/TerraLuna. Reddit. May 11, 2022. ↩︎

  • White, Molly. “Excerpts from letters to the judge in the Celsius Network bankruptcy case”. July 22, 2022. ↩︎

  • “2022 Wealth & Wellness Index”. Personal Capital. Empower. 2022.

  • Even those with steady employment often don’t see the kinds of salaries in their futures that would deliver them to financial freedom, nor do they see hope in the comparatively modest returns of traditional (and non-Ponzoid) financial investments. And crypto has been sold to them as the solution.

    Crypto is being described as the future of finance, the “new” and “evolved” form of money, the ticket to “unlocking generational wealth” that is no longer available to so many people, and the way to accumulate the most money in a tough economy with high inflation and stagnant wages. It’s the way that, according to the headlines, people are earning huge returns and escaping their dire circumstances.

    The balance of the main DeFi wallet of Celsius Network went from $5.6 billion in Ethereum, WBTC and other tokens to $10,514, with massive withdrawals of WBTC from AAVE and $247 million was transferred to FTX exchange.

    @MikeBurgersBurg, expert and crypto proponent investigated the withdrawals and shared insights in a recent tweet:

    @yieldchad, a crypto analyst, argues,

    Celsius lost client money, and need to mark down the value of all deposits, or else they are liable to a bank run.

    The debate on whether Celsius is technically insolvent or not has raged since the first week of June 2022.

    While withdrawals from the leading DeFi wallets can be likened to a bank run, Celsius is yet to explain the move and the purpose of replacing WBTC and ETH withdrawn from AAVE with stablecoins like USDC.

    Celsius halts withdrawals citing extreme market conditions

    Celsius Network announced on June 13, 2022, that all withdrawals, swaps and transfers between accounts have been paused. Celsius cited this action as a step to put the project in a better position to honor its withdrawal obligations.

    The project informed users that this action was taken in the community’s best interest, to stabilize liquidity and operations while protecting assets.

    The project confirmed that customers would also accrue rewards during the pause period.

    Experts on crypto Twitter have pointed out that Celsius is going through a rumored liquidity crisis.

    Celsius paid users 30% interest weekly

    Users stake capital on Celsius, the network uses capital on its platform to fund its own investment and cover loans it makes to other users.

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